2 Fidelity ETFs to Buy in July to Generate Big Passive Income In Retirement

When you’re young, it makes sense to buy riskier growth stocks that have high potential upside. However, investors tend to minimize their risk as they get older and look for safer investments that generate passive income.

There are two Fidelity ETFs that check both boxes. They are less volatile than the stock market and offer high yields. One of the ETFs on this list offers broad exposure to U.S. stocks, while the other fund gives investors the opportunity to benefit from international stocks. This level of diversification further reduces risk while resulting in some solid cash flow. 

You may want to keep these two Fidelity ETFs on your radar if you want to prioritize cash flow over high long-term returns.

Fidelity High Dividend ETF (FDVV)

The Fidelity High Dividend ETF (NYSEARCA:FDVV | FDVV Price Prediction) has a 3.13% SEC yield and a 0.16% expense ratio. Tech overrepresents the fund and makes up 24.5% of total assets. Financial services, consumer staples, and real estate are the next three categories, and each of them makes up more than 10% of the fund’s total assets. 

The fund has a little more than 100 holdings and has a good mix between high-yield stocks and growth stocks. Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), and Nvidia (NASDAQ:NVDA) are the top three positions, and they make up more than 15% of the fund’s total assets. It’s easy to forget that Nvidia has a dividend, but its inclusion in the fund has been to the great benefit of investors.

The fund has produced an annualized 16.8% return over the past five years. Big tech stocks seem to do the heavy work when it comes to returns, and high-yield stocks in the fund help push the SEC yield above 3%. It’s a good dynamic that results in steady passive cash flow, less volatility, and the opportunity to generate respectable returns.

Fidelity International High Dividend ETF (FIDI)

Most investors prefer to hold U.S. stocks since those assets tend to produce outsized returns. However, the start of the year put the spotlight back on international stocks as tariffs caused investors to flee U.S. stocks in exchange for international stocks.

This event further emphasized the importance of international exposure, and if you want high cash flow too, the Fidelity International High Dividend ETF (NYSEARCA:FIDI) has a sterling 4.33% SEC yield and a 0.18% expense ratio. 

Interestingly, the fund has almost no tech stocks. The sector only makes up 1.7% of its total assets, so if you want passive income and diversification away from tech, this Fidelity ETF is promising. Financial services make up almost one-third of total assets, with consumer staples, basic materials, industrials, and utilities each making up more than 10% of the fund’s total assets.

FIDI has more than 100 holdings and pours 26% of its total assets into its top 10 holdings. The fund has delivered an annualized 12.2% return over the past five years, and its annualized returns have been accelerating. The annualized 3-year return is 13.4%, while the fund has delivered a 19.4% return over the past year. It’s also up by about 20% year-to-date, which is a shocking performance for a high-yield ETF.