Friday, 1 January 2021

Best Monthly Dividend Stocks And ETFs To Buy For 2021

Investing money to earn income from dividends is a popular way to earn passive income. Dividend investing can be simplified by purchasing ETFs, making it possible for anyone to earn steady passive income with very little money. Most people agree that it's enjoyable to see dividend payments arrive, simply for owning shares of a company. That passive income can be used to help pay bills while the price of the investment appreciates over the long term.

A dividend retirement strategy is desirable for many reasons, one of which is that the payments will keep coming without having to touch the principal of the investment, and there's no need to sell anything in order to realize income. The majority of stocks and ETFs pay dividends quarterly, but those irregular payments can make it a challenge to budget when relying primarily on that income. There is a selection of quality funds that make their payments monthly which not only makes budgeting easier, but more frequent payments can be reinvested sooner, allowing your investments to compound faster.

These funds in this article have been chosen to provide stability, growth, and monthly income for a reasonable cost.

1. DTD

The wisdom tree u.s total dividend fund holds a broad range of dividend-paying stocks. This includes companies that pay regular dividends and meet liquidity and capitalization requirements that have been established by WisdomTree. Because of this, you can expect returns to be similar to the overall stock market. Financial Services is the largest sector held, followed by technology, consumer defensive, and industrials. Among the largest holdings are Apple, Microsoft, Exxon, and JPMorgan Chase

This is a well-diversified fund that provides exposure to many different companies, most of which are large caps. With over 1500 holdings, investors will sleep well knowing their risk is spread across many different stocks. The dividend yield isn't very high though, at approximately 2.5%. However, investors who have plenty of money to fund their needs might not need more than this. The expense ratio is reasonable at 0.28%

2. DIA

This is SPDRs Dow Jones Industrial Average ETF. Meaning, it will mirror the returns of the 30 large companies listed in the Dow. This index is commonly referred to as the market, along with the S&P 500. This includes well-known names such as Boeing, United Health Group, Apple, the Home Depot, and McDonald's.

Dia isn't designed to provide a high dividend as a result, the yield is around 2%, but consider that the fund isn't very well diversified since it only holds 30 companies which is very low for an ETF. Because of this, the price will fluctuate based on the daily performance of the companies listed. In other words, when Boeing stock underperforms, the whole fund feels the impact. Alternatively, this fund is diversified among the sectors, but just not many companies

Consider adding this fund to your portfolio in addition to other more diversified products that have more holdings. The expense ratio of 0.17% is very low for this type of investment

3.  DHS

WisdomTree u.s. high dividend fund tracks high dividend-paying stocks in the united states. DHS is similar to the other WisdomTree fund mentioned prior, but it achieves a higher dividend yield by selecting companies with higher than average dividends. Subsequently, the dividend yield is around 3.5%. Consumer defensive includes companies that manufacture food, household, products, tobacco, and related items. Real estate and energy are the largest sectors held which provide some stability during poor economies 

There are over 300 large-cap value stocks held which provide a fair amount of diversification among many sectors and companies. Although, since it's geared towards providing a high dividend, growth will likely be lower than average. The largest holdings include AT&T, abbvie, Chevron, and Philip Morris, as well as consumer staple companies like Procter & Gamble and coca-cola. The expense ratio is 0.38% 


The super dividend reaps ETF invests in 30 of the highest dividend-yielding REIT or real estate investment trusts globally. A REIT is a company that owns and typically operates income-producing real estate. Most commonly, this is rental real estate, but some REITs invest in mortgage-backed securities. Because of the tax structure of a REIT, they're required to pay most of their income in the form of dividends which makes them fantastic for dividend investors

The global exposure this fund provides can be beneficial for investors who only own u.s. investments. This fund is solely invested in real estate which is one single sector, although, it's been said that real estate is more diversified than most single sectors such as energy, technology, in industrials. The dividend yield is very high when compared to other reed funds at around 8%, but previous growth has been almost non-existent since the fund's inception five years ago

Independence Realty Trust, Stockland, Arbor Realty Trust, & Tamera Investment Corporation, are well-known names among the top ten holding's. When considering this fund, make sure you're not over concentrating your portfolio if this fund is not well diversified. Means, remember that SRET is simply a fund comprised of 30 companies in one single sector. So it's not suggested to put your entire portfolio in this one fund. The expense ratio is somewhat high at 0.58%

5.  SPLV 

This is the Invesco x' SP 500 low volatility index which holds 100 of the least volatile stocks in the S&P 500. Although not geared specifically for dividends, stable and mature companies naturally tend to pay slightly higher than average dividends. The fund yields just over 2% which is slightly higher than the average of the S&P 500. Utilities, real estate, and financial services make up the largest sectors of the fund, followed by consumer defensive and industrials. 

Making up the largest Holdings are Eversource Energy, Duke Energy, and American Electric Power. This might sound like the fund is over-concentrated in the energy sector, but every stock held the selected from the S&P 500 due to the fact that they each had the lowest realized volatility over the previous 12 months. Regardless, purchasing any variation of the S&P 500 is reasonably stable and diversified. Why is this, because in order for the stock to be part of this index, it must meet certain valuation and sustainability requirements to ensure they're suitable for everyday investors. The expense ratio is 0.25%


SPHD is invest goes S&P 500 high dividend ETF which chooses 50 of the highest yielding least volatile stocks held in the benchmark offered at an expense ratio of 0.3%. Real estate is the fund's largest sector allocation, followed by financials, utilities, and energy. Some of the largest holdings consist, Iron Mountain, Altria, Philip Morris, and Western Union

The dividend yield is just under 4.5% which makes it a great investment for those seeking income combined with slow and steady growth. Consider that since the dividend is relatively high, growth will probably be slower than average. This is because high-yielding stocks are almost always older and more mature with less upper potential which is why they choose to pay their shareholders. Moreover, many of the high dividend stocks have uncertain futures. In other words, the business could be dwindling which is why the yield has risen higher than average. In general, sales are going to increase, but it's important to give thought to the future of some of the holdings even though they've met the S&P 500 requirements.

For example, how do you feel about the future of the tobacco industry of which this fund holds a sizable position?. When analyzing any fund there are going to be companies that you'd rather not own whether for personal reasons or future outlook. In any case, this fund is an excellent well-rounded product for those seeking income in a combination of diversification and stability. For those reasons, this fund is my personal favorite from monthly dividend investing


With the combination of these funds, you'll be able to generate monthly passive income either for retirement or simply to reinvest. Whether or not these monthly dividend funds are worth the extra cost when compared to similar orderly paying funds is your decision. Perhaps, you prefer the convenience of more frequent payments or maybe the quarterly checks would be fine. If the fees are higher than you prefer, you could set up an account in which your quarterly dividends will be deposited and then transfer money into your checking account, on a weekly, bi-weekly, or monthly basis

This way, you're receiving regular payments without the higher expense these monthly paying dividend funds charge. This method does require a little more legwork to set up, but the savings would be substantial if your portfolio was sizeable. With a 1 million dollar portfolio, the savings between a fund with a 0.5% expense ratio in a .05% expense ratio is $375 per month. However, one could argue that the monthly dividends can be reinvested sooner, and will grow up quicker. Some people would rather just pay a higher expense ratio for convenience and that's completely fine if regular income is needed. There's no need to obsess about the expense ratio especially if they're already low.

Regardless, the number one factor in determining a successful retirement is the act of setting money aside and allowing it to grow  

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