5 Monthly Dividend ETFs for Income Portfolios
Monthly dividend exchange-traded funds (ETFs) can set you up with a steady stream of income. Instead of manually buying a basket of dividend stocks, all it takes is one buy order. Then month after month, you’ll collect income.
With the best dividend ETFs, the income increases over time. The companies in each fund continue to add more value to shareholders. And when buying a basket of stocks via an ETF, you benefit from instant diversification, which helps minimize some risk.
If one company stalls or even goes bankrupt, the others should help minimize the loss. And as already mentioned, the monthly dividend income should climb over the years. That’s barring a few short-term setbacks like individual company missteps and recessions.
Overall, investing in the stock market has been one of the best ways to generate long-term wealth and income. That’s why I’ve done a deep dive into thousands of investing opportunities over the last decade.
Below you’ll find a list of some of the best ETFs that pay monthly dividends. I’ve also highlighted some key considerations for each fund…
Best Monthly Dividend ETFs
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Global X SuperDividend ETF (NYSE: SDIV)
Dividend Yield: 12.87%
Expense Ratio: 0.58%
Number of Holdings: 112
This fund just barely makes the list. It has one of the highest expense ratios… but it also has a higher yield. If you’re looking for higher yield at the expense of potentially lower capital gains down the road, this could be a good fund.
One highlight with this ETF is global diversification. Only about a quarter of its assets are in the U.S. The next four largest country holdings are China, Hong Kong, Britain and Brazil. So if you want some global exposure in your portfolio, this could be a good investment.
The Global X SuperDividend ETF also has a high weighting in real estate. It comes in close to 37% of the total weighting, followed by financials and materials. Each of those sector weightings comes in at 13.5% and 9.5%, respectively.
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Invesco High Yield Equity Dividend Achievers (Nasdaq: PEY)
Dividend Yield: 3.83%
Expense Ratio: 0.53%
Number of Holdings: 51
This Invesco monthly dividend ETF tracks the Nasdaq U.S. Dividend Achievers 50 Index. It’s also one of the oldest funds on this list. It dates back to 2004 and has consistently rewarded investors.
In 2010, this monthly dividend ETF paid a total of $0.35 in dividends. Now, total dividends for the year had climbed to $0.83. That’s some big dividend growth over 12 years, and it far outpaces inflation.
When it comes to holdings and sector allocation, about a quarter of the companies are in the financials sector. That’s followed by utilities and consumer defensive with 24% and 14.5%, respectively. A total of 51 holdings isn’t the highest on this list, but it still provides decent exposure and diversification, making it one of the best monthly dividend ETFs.
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WisdomTree U.S. High Dividend Fund (NYSE: DHS)
Dividend Yield: 3.21%
Expense Ratio: 0.38%
Number of Holdings: 314
WisdomTree offers a wide range of funds, and this monthly dividend ETF has low fees. It has a track record going back to 2006, and overall it’s been a great monthly dividend ETF to own. Although it wasn’t always paying monthly dividends.
This fund switched over to monthly dividends in 2012. Its first full year of paying monthly dividends was 2013 and total dividends came in at $1.76 that year. Over the years, the payout has climbed and is projected to be $2.38 in 2022. That’s some great income growth.
This high dividend fund got off to a slow start in 2022, which makes sense with ongoing market volatility. However, it has seen modest growth since then and is currently up about 0.2% so far this year.
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Invesco S&P 500 High Dividend Low Volatility ETF (NYSE: SPHD)
Dividend Yield: 3.65%
Expense Ratio: 0.3%
Number of Holdings: 51
Just like the other Invesco ETF on this list, this one also has 51 holdings. Although it’s focused on minimizing volatility. It doesn’t have as high of sector concentrations.
Utilities is the highest weighting, and it comes in at 19%. The financial sector is also much smaller at 6%. That’s in contrast to the other Invesco ETF on this list, which has close to a 25% financial weighting.
This diversification and targeting also helps to lower volatility. On top of that, this monthly dividend ETF is a bit newer with an inception date of 2012. These differences have helped keep the expense ratio lower, making it a top monthly dividend ETF for investors looking to maximize their gains.
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SPDR Dow Jones Industrial Average ETF Trust (NYSE: DIA)
Dividend Yield: 1.85%
Expense Ratio: 0.16%
Number of Holdings: 30
This fund is one of the oldest ETFs still around having been launched in 1998. It is one of a few funds that tracks the Dow Jones Industrial Average. It is has the fewest holdings on the list and high sector concentrations.
Healthcare and financials are the largest, with weightings of 22% and 20% respectively. The next highest is tech, coming in at 17%. This fund also ignores some sectors such utilities and real estate entirely.
Although it has the lowest dividend yield, it pays the highest annual dividend, which is projected to be $5.20 this year. It also has the advantage of offering by far the lowest expense ratio of the group. Just like any fund, this one has advantages and disadvantages, but its high dividends, low expense ratio and long history make it a solid choice for a monthly dividend ETF.
Living Off Monthly Dividends
ETFs that pay monthly dividends are a great way to pay living expenses. The recurring income can help provide some peace of mind.
As mentioned, you can also set up a similar portfolio by manually buying stocks, like these top monthly dividend stocks. However, the timing of income can be all over the place when buying them individually. Also, there’s not as much diversification benefit.
Either path you choose can still be rewarding. It just comes down to personal preference. And generating higher income from investing is a goal many people can meet. In the words of dividend expert Marc Lichtenfeld…
There are lots of ways to invest your hard-earned money. But you’ll soon see why investing in dividend stocks is a conservative way to generate significant amounts of wealth and income. This isn’t theory. It’s been proven over decades of market history.
Investing in dividend-paying companies and funds is a powerful strategy (check out our free dividend calculator). And with lower barriers of entry to the stock market, anyone can get a piece of the action. Technology has helped lower trading costs, as well as certain fees associated with these funds. So you can get started even with a small amount of savings.