Best High Yield ETFs Right Now • Updated Daily • Benzinga

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You can spend countless hours sifting through thousands of stocks individually to determine their annual dividend rates, or simply invest in high-yield ETFs.

High yield ETFs give you assets in a basket of companies that reward their shareholders with regular dividends. With a few good investments, these outrageous payments can become a reliable source of income for you. If you’re a long-term investor looking for stocks that offer above-average dividends, high yield ETFs are a solution to your financial needs.

A look at the best high yield ETFs

  • ProShares Short High Yield ETF
  • iShares interest rate hedged high yield bond ETF
  • iShares Select Dividend ETF

High yield ETFs are the biggest winners and the biggest losers

Here’s a list of high-yield stock market ETFs with the most gains and losses.

Why invest in high yield ETFs?

Here are the top 3 reasons why you should consider investing in these ETFs.

1. High yield ETFs are a good source of passive income.

You can create a stable and predictable source of income by investing in these ETFs. Some of these ETFs issue monthly or quarterly dividends that can cover your household expenses throughout the year.

Earlier this year, the S&P Dow Jones Indices announced that companies listed on the S&P 500 index must pay more than $500 billion in dividends to shareholders. However, the outbreak of COVID-19 may have reduced that number. But the Federal Reserve’s recent pledge to buy undervalued corporate bonds has boosted some of the ETFs that track these companies.

2. High yield ETFs are cheaper than high yield mutual funds.

As an investor, you should be familiar with ETFs and mutual funds. While both investment options are good for returns, be aware that mutual funds generally cost more than ETFs.

There is an expense ratio involved in buying mutual funds and ETFs. These expense ratios can vary between 0.01% and 2.5% or more. High yield ETFs are relatively cheaper than mutual funds because ETFs are passively managed and reflect the performance of benchmarks.

3. High-yield ETFs can help you plan for your retirement.

You can start planning for retirement early by investing in high-yield ETFs. Map out your expected day-to-day expenses and invest in ETFs that bring you both cash and dividends.

Suppose you need 3% of your total capital for your expenses. You should aim for a total return of approximately 7% on your financial portfolio. You need this buffer to cover the costs of expense ratios and capital gains taxes, among other things. And if you have 20 to 30 years left before you retire, you can reinvest the dividends in these high-yield ETFs for better returns.

Top 3 High Yield ETFs by AUM

ETFs pay cash or stock as dividends. You should invest in high-yield ETFs with cash dividends for immediate liquidity rather than having to sell your shares in the market for a payment at a later date.

Before investing in ETFs, you should evaluate index performance, expense ratios, liquidity, return history, annual dividend rates, and total assets under management (AUM). You can consider these high yield ETFs to give you an edge.

1. ProShares Short High Yield ETF

The ProShares Short High Yield ETF (NYSEARCA:SJB) provides daily reverse exposure to an index composed of junk bonds, which have a high risk of default. The ETF is useful as a tool to make a tactical bet against the junk bond sector. The fund can be useful for taking a short position over a longer period of time, although it is not as useful if you want to invest in it as a long-term addition to your portfolio.

2. iShares Interest Rate Hedged High Yield Bond ETF

The iShares Interest Rate Hedged High Yield Bond ETF (NYSEARCA:HYGH) includes shares of the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and short positions in interest rate swaps. It was created to mitigate the interest rate risk of a portfolio of US dollar high yield corporate bonds.

3. iShares Select Dividend ETF (NASDAQ:DVY)

iShares Select Dividend ETF has an expense ratio of 0.39%. It matches the Dow Jones US Select Dividend Index and exposes you to dividend-paying stocks across the stock universe. This ETF has total assets under management of $13 billion.

iShares Select Dividend ETF trades over a million shares daily. It has an annual dividend rate of $3.68 and a dividend yield of 4.77%. iShares Select Dividend ETF has a 5-year yield of 20.45%.

Best Online Brokers for High Yield ETFs

You can find and invest the best ETFs with an online broker. Most online brokers allow you to trade ETFs commission-free. Benzinga has selected the best online brokers to help you achieve your financial goals.

1. Trading Station

TradeStation is an online broker equipped with an ecosystem of powerful trading technologies. You can open a TS SELECT account with a minimum deposit of $2,000 or a TS GO account with a minimum deposit of $0.

With TradeStation, you can trade over 2,000 ETFs that track indices, sectors, commodities, and currencies. You can access and manage your account through desktop, web, and mobile apps. TradeStation is regulated by the Financial Industry Regulatory Authority (FINRA).

2. First class

Unlock a wide variety of investment opportunities online with Firstrade. You can open an account on Firstrade with no minimum deposit amount.

Firstrade’s advanced technology makes it easy and transparent to execute your trading strategies. With Firstrade Navigator you can place and manage orders, view your positions and monitor the market from a single screen. Firstrade is regulated by FINRA.

3. TD Ameritrade

TD Ameritrade is a leading online brokerage that helps you trade with confidence and ease. There is no minimum deposit required to open an account on this platform.

TD Ameritrade offers a customizable dock to keep you up to date with the latest stock market news from Yahoo! Finance. You can manage your wallet through the web or the mobile app. TD Ameritrade is regulated by FINRA.

Dividend-driven investments

High yield ETFs are subject to high volatility. You should monitor performance regularly and keep an eye out for any dividend cuts. If the ETF’s dividend yield is less than your financial needs, don’t be afraid to sell your stocks and make a better investment that meets your financial needs.

Q

What Are High Yield ETFs?

A

High-yield ETFs are collections of company stocks that offer good dividends to their investors.

Q

Are High Yield ETFs Volatile?

A

High yield ETFs can be volatile, so it’s important to research your options before investing.

Q

What are the best high yield ETFs?

A

Above is a list of recommended high yield ETFs.

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