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Maybe you’re currently retired, or maybe you’re just thinking about it. Either way, today is a great day to build a strategy for financial freedom in your golden years with dividend-paying exchange-traded funds (ETFs).
Truly, ETFs can be the bedrock of your retirement portfolio and some of them pay decent dividends. It’s challenging, however, to locate funds that provide reasonably high yield along with portfolio diversification and high-quality stock holdings.
On top of all that, retirees and near-retirees should seek out ETFs that don’t charge excessively high management fees. This isn’t a pipe dream as I’m about to bring you three handpicked funds with good yields that are ideal for retirement investing.
Global SuperDividend U.S. ETF (SDIV)
Our first selection is the Global SuperDividend U.S. ETF (NYSEARCA:SDIV). This fund deducts a 0.58% expense ratio from the share price, which equates to $0.58 per year for every $100 invested in the fund.
That’s not a rock-bottom expense ratio, but it’s also not exorbitantly high. What’s important is that retirees can achieve multiple objectives at once with the Global SuperDividend U.S. ETF.
For the 0.58% annual expense ratio, you’ll get a lot of bang for your buck with the SDIV ETF. To start off, this fund provides a fair measure of diversification; it includes 104 holdings representing businesses across multiple regions of the world.
As the fund’s web page explains, the Global SuperDividend U.S. ETF invests in over 100 of the “highest dividend yielding equity securities in the world.” That’s why the SDIV ETF can offer an eye-catching 8.97% annualized dividend yield.
Suddenly, the 0.58% expense ratio looks like just a minor inconvenience. And it gets even better as the Global SuperDividend U.S. ETF pays out dividend distributions on a monthly basis. This means you can frequently reinvest the dividends and potentially compound your wealth
All in all, the SDIV ETF isn’t overly aggressive as it’s diversified enough to mitigate the risk somewhat. You’re encouraged to learn more about the Global SuperDividend U.S. ETF and see why this fund could be a perfect addition to your yield-seeking portfolio strategy.
iShares Select Dividend ETF (DVY)
Now, we’re going to slow down the pace because retirement investing requires careful consideration, not chasing the highest yields. After adding a few shares of the SDIV ETF, you can de-risk your portfolio by diversifying into the iShares Select Dividend ETF (NASDAQ:DVY).
The DVY ETF is less aggressive than SDIV in terms of annual yield, but it’s still ambitious with its 3.65% yield. Plus, it provides a respectable degree of diversification as the iShares Select Dividend ETF includes 98 holdings.
For the price of a 0.38% annualized expense ratio, the DVY ETF will give you exposure to some highly established businesses that are known for paying regular dividends. These include Pfizer (NYSE:PFE), Verizon Communications (NYSE:VZ), Ford Motor (NYSE:F) and Altria (NYSE:MO).
Combining a few shares of SDIV with some DVY shares could make a lot of sense for yield-seeking retirement investors. Since the iShares Select Dividend ETF offers exposure to well-known U.S. companies, it could serve as a complement to the internationally diversified SDIV ETF.
We’re not finished yet, though, since it’s wise for retirees to diversify and de-risk beyond holding just two funds. Let’s keep the DVY ETF on our list along with SDIV but add one more high-paying dividend ETF to branch out even further.
Invesco S&P SmallCap High Dividend Low Volatility ETF (XSHD)
It’s time to pick up the pace again, but in a careful way. We’re going to turn our attention to the Invesco S&P SmallCap High Dividend Low Volatility ETF (BATS:XSHD), a fund that generates a high yield for income-focused retirement investors.
As the name suggests, the Invesco S&P SmallCap High Dividend Low Volatility ETF seeks robust dividends without going overboard on share-price volatility. It includes 60 holdings, and while the businesses on the list aren’t gigantic, they’re also not massively risk-prone.
The XSHD ETF is able to offer an attractive 7.13% yield (based on the SEC 30-day yield) because it heavily focuses on real estate businesses, and real estate firms are sometimes known for paying high dividend yields. Also, like the SDIV ETF, the Invesco S&P SmallCap High Dividend Low Volatility ETF distributes its dividend payouts on a monthly basis.
Some retirees may consider investing in real estate assets like apartments and shopping centers, and this can be done indirectly through the XSHD ETF. The fund’s expense ratio of 0.3% is reasonable when compared to the dividend yield, so the Invesco S&P SmallCap High Dividend Low Volatility ETF looks like a perfect addition to a retirement portfolio.