These 3 Dividend ETFs Are a Retiree's Best Friend
Dividend ETFs are one of the best investments retirees can make. You need passive income and limited volatility to navigate your golden years, and these vehicles provide both. Dividend income can supplement Social Security and provide cash flow for your lifestyle and basic needs. Meanwhile, the diversification provided by ETFs helps to dilute risk and limit the amount your portfolio can fluctuate in value. As always, the trick is figuring out which ones are the best-in-class and best suited to your investment goals.
The Vanguard High Dividend Yield ETF (NYSEMKT: VYM) is a straightforward and efficient tool that provides diversified dividend income. This fund holds more than 400 stocks, the vast majority of which are large-caps. Stocks are selected on the basis of forecast dividends, then weighted according to market cap.
This might be the most passive strategy that can be applied to an ETF that's more selective than an index fund. That results in an ultra-low 0.06% expense ratio, which is great for investors looking to minimize costs. It's also a large fund with nearly $39 billion of assets under management and over $100 million in daily trading volume. That means that it's highly liquid, so it's easy to sell and won't reduce your returns with a high bid-ask spread.
Source Fool.com
