There are many different ways you can use dividends to build a portfolio, so investors looking to build a dividend portfolio have lots of options. That's true even if you're looking to simplify your investment life by using exchange-traded funds (ETFs). Here are three very different dividend ETFs that can each lay the foundation for a diversified-income portfolio.

A lot of investors who focus on dividends are looking for yield in an effort to build a strong income stream to supplement Social Security in retirement. That's completely understandable, and a good choice in the exchange-traded fund space is the Vanguard High Dividend Yield ETF (NYSEMKT: VYM), which tracks the FTSE High Dividend Yield index.

It isn't a particularly complicated methodology. It basically takes the highest-yielding stocks from the index and then weights them by market cap -- i.e., the fund invests more money in the larger companies than in the smaller companies.

Continue reading

Source Fool.com