Best dividend ETFs to buy in 2023
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Dividend paying stocks are often the first port of call for anyone wanting regular income from their investments. However, buying shares in dividend ETFs offers an easier way to invest in companies that make regular payments to shareholders. Our beginner friendly guide picks the best dividend ETFs and tells you where to buy them.
What are the top dividend ETFs to buy?
In the table below we’ve listed the best five dividend ETFs selected by our expert analysts. You’ll find each one’s ticker symbol and name. Continue scrolling to learn more about each ETF in detail or have a look at our comprehensive article if you would like to learn more about buying ETFs.
| # | ETF symbol | ETF name | Where to Trade |
|---|---|---|---|
| 1 | JEPI | JP Morgan Equity Premium Income ETF | |
| 2 | DVYE | iShares Emerging Markets Dividend ETF | |
| 3 | KBWD | Invesco KBW High Dividend Yield Financial ETF | |
| 4 | VHYL | FTSE All-World High Dividend Yield UCITS ETF | |
| 5 | GBDV | SPDR S&P® Global Dividend Aristocrats UCITS ETF |
1. JP Morgan Equity Premium Income ETF (NYSEARCA: JEPI)
Taking first spot on our list is the JP Morgan Equity Premium Income ETF. The fund includes a diversified portfolio of large-cap dividend paying stocks as well as option premiums. A key feature of JEPI is the monthly payment of all income earned while incurring less volatility than the broader market.
It sells call options on its managed volatility and is one of the top paying dividend ETFs, with a yield of over 8%. Infact, its yield is in the top 1% of all US registered funds. Unlike many other ETFs, JEPI does not track an index, rather is overseen by portfolio managers. It uses proprietary ranking models to select its companies.
It has over 100 holdings and offers a fairly equal split amongst industries and stocks. Some of the world’s best known businesses are held by the ETF, including Microsoft, Google, and CocaCola. Buying shares in JEPI could be a good idea for anyone wanting consistent monthly income, while having exposure to some of the largest U.S based companies.
2. iShares Emerging Markets Dividend ETF (NYSEARCA: DVYE)
The iShares seeks to track the performance of the Dow Jones Emerging Markets Select Dividend Index. It invests in a broad range of high dividend paying established companies in emerging markets. DVYE has a yield of over 7% and gives investors access to around 100 stocks held in its portfolio.
It is well diversified with investments in companies from around the world, although about half of the fund is geared towards Chinese, Russian, and Brazilian businesses. It has a mostly equal weighting system meaning no single company is able to drastically impact its performance. The Energy, financial, and utilities sectors are where almost half of the funds holdings reside.
Since its inception in 2012 it has dropped in value, although some of that drop was down to the coronavirus pandemic. In the time following, it has recouped part of its losses. The iShares takes second place on our list as it not only offers a strong dividend yield, but it gives exposure to some of the best emerging market stocks.
3. Invesco KBW High Dividend Yield Financial ETF (NASDAQ: KBWD)
Third place on our list goes to the Invesco KBW High Dividend Yield Financial ETF. The fund seeks to track the performance of the KBW Nasdaq Financial Sector Dividend Yield Index. As its name suggests, it aims to invest in high dividend financial companies based in the United States. KBWD has a yield of just over 7%.
It predominantly holds small-cap value stocks although it does include some midcaps. It invests across the whole financial sector and includes traditional investment companies, mortgage providers, and real estate investment funds among others. It’s one of the smallest funds in terms of number of holdings, with just over 40.
The fund has performed well in recent times and has climbed by over 100% in value in a short span of time. It offers a fairly equal weighting across the board and gives investors the safety net of knowing no single stock can impact its price too much. Although, it’s important to bear in mind its reliance on one specific sector.
4. FTSE All-World High Dividend Yield UCITS ETF (LSE: VHYL)
The FTSE All-World employs a passive management approach and seeks to track the performance of the FTSE All-World High Dividend Yield Index. It invests in large and mid-sized stocks in developed and emerging markets that pay dividends that are generally higher than average.
VHYL has a dividend yield of over 3% and includes over 1700 stocks within its portfolio. Its holdings are split across the world, although almost half are U.S. based companies. It favours the financial sector which makes up a quarter of the fund and invests in some of the world’s leading companies.
Home Depot, JP Morgan, and Bank of America are some of its top investments. The fund is mostly equal in its allocation to each of its holdings making it a safer and more diversified investment. Although VHYL has a lower dividend yield compared to other funds on our list, it’s exposure to worldwide markets and diversified portfolio make it a top dividend ETF.
5. SPDR S&P® Global Dividend Aristocrats UCITS ETF (LSE: GBDV)
Final place on our list goes to the SPDR S&P Global Dividend Aristocrats ETF. The objective of the Fund is to track the performance of high dividend yielding equities globally. It does this by investing in companies that have followed a managed-dividends policy of increasing or maintaining dividends for at least 10 consecutive years and simultaneously have positive return on equity and cash flow from operations.
It has a dividend yield of over 3.5% and holds around 100 stocks within its portfolio. Similar to other ETFs on our list, the financial industry makes up a large portion of the fund. Around 30% of its holdings belong to the sector, with the rest split between utilities, consumer staples, and real estate among others.
GBDV is heavily invested in U.S. located businesses so it is not as geographically diversified as other ETFs. Some of its largest holdings include Exxon Mobil, Japan Tobacco, and GlaxoSmithKlein. Its criteria for buying stocks that have at least 10 consecutive years of maintaining dividends means it could be a safer investment compared to other dividend ETFs.
If you are considering to learn more about which ETFs overall are the best ones, you should have a look at our experts suggestions regarding this topic.
Where to buy the best dividend ETFs
To buy the best dividend ETFs you will first need to register with a broker. The table below has a selection of our expertly recommended brokers. Simply click the links to register in just a few minutes.
What is a dividend ETF?
It’s an exchange traded fund that’s available to buy and sell on the stock market. Dividend ETFs give investors exposure to a basket of stocks which pay regular dividends. ETFs of this nature are most suited to anyone seeking income from their investments. Dividend ETFs are not tied down to a specific industry niche and can invest in a range of stocks.
Dividend ETFs invest in all sizes of companies and include some of the largest and best known businesses in the world. You are able to buy shares in a dividend ETF the same way as any other stock. Most ETFs track the performance of a particular index or industry.
Are dividend ETFs a good investment?
Yes they can be and they are best suited for anyone wanting to generate income from their investments. Typically, investors who seek regular income buy individual stocks, however, dividend ETFs offer a much easier way to earn regular payments. These types of ETFs not only pay dividends but give investors exposure to a diversified range of stocks.
Most dividend ETFs invest in companies from across the globe and include the largest blue chip companies, to smaller businesses in emerging markets. Some dividend ETFs only buy stocks of companies that have historically maintained dividend payments, while other don’t. So it’s important to consider the types of companies included in any ETF.
Whatever you decide to do, it’s key to keep up to date with the latest news and market analysis which you can do by clicking any of the links below. You’ll also need to register with a trusted broker prior to buying an ETF. If you click on the button below you’ll be taken to a selection of our expertly selected ETF platforms offering dividend ETFs.
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