Many choose to take the path of least resistance and pick only the S&P 500 and nothing else, holding it for decades until they retire with a middle-of-the-road amount. Some of them continue holding SPY-like ETFs even after they retire.
However, having some dividend ETFs in your portfolio can cause your portfolio to snowball in the long term while giving you passive income when you need it.
There are ETFs that can get you far higher yields and significantly boost your dividend income. A little bit of research can get you over the finish line.
More yield does mean more risk, but the correlation isn’t linear. Many dividend ETFs have delivered higher yields and have done so while outperforming the broader market. You can partially allocate your portfolio to such dividend ETFs to boost your total returns over the next decade.
Here are three dividend ETFs to look into:
Amplify CWP Growth & Income ETF (QDVO)
Amplify CWP Growth & Income ETF is an actively-managed ETF that holds 40 U.S. growth-oriented stocks and then tactically sells short-term covered-call options on those same holdings to turn part of their upside into immediate cash.
The goal is to keep most of the capital-appreciation engine of growth stocks while layering on a high, monthly distribution stream that comes from both dividends and option premiums.
Because the managers only write calls when volatility or price momentum looks favorable, the portfolio isn’t always “fully covered,” leaving room to participate if the underlying stocks soar higher.
If large-cap growth resumes its leadership and option premiums stay rich, QDVO could deliver equity-like upside with a cushioned ride and a very high yield. If tech stalls, the call premiums should still provide a buffer and a steady monthly paycheck.
The current yield is 11.7% with a 0.55% expense ratio, or $55 per $10,000 invested. The total return is 27.6% over the past year, which is much better than the broader market.
Avantis International Small Cap Value ETF (AVDV)
Avantis International Small Cap Value ETF (NYSEARCA:AVDV | AVDV Price Prediction) is an actively-managed ETF that invests in small-cap stocks in developed markets outside of the U.S. that its management deems are undervalued. It uses a multi-factor, rules-based methodology to find undervalued stocks with strong fundamentals while avoiding value traps and low-profitability companies.
AVDV is up 35.7% year-to-date and can trounce the broader market’s gains over the coming years if penny stocks catch up and exchange rates normalize. Penny stocks have been lagging due to higher interest rates worldwide and a consolidation into a few mega-cap stocks.
However, the pendulum is going the other way with interest rate cuts. This can lead to AVDV stock delivering even stronger returns.
This ETF has a 3.29% dividend yield and an expense ratio of 0.36%, or $36 per $10,000.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO) is an actively-managed ETF that owns a concentrated basket of high-quality, large-cap U.S. companies with a long history of growing both earnings and dividends.
The sub-advisor writes covered calls on only the individual stocks where volatility, valuation, and technical setup look attractive. That selective overlay generates 2-4% of extra annual income from option premiums while still leaving most of the upside on the table, so the fund can also participate in bull runs rather than being permanently capped like index-wide buy-write products.
If blue-chips keep hiking dividends and option premiums stay rich, DIVO should keep churning out a tax-friendly 4-5% cash stream with good growth and less drama. This is ideal for retirees or anyone who wants an above-average yield for the coming decade and beyond.
The dividend yield is 4.72%, with an expense ratio of 0.56%, or $56 per $10,000.
It hasn’t outperformed the market, but it pays substantial dividends and comes with better downside protection.
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