The Schwab US Dividend Equity ETF (NYSEARCA:SCHD | SCHD Price Prediction) is often seen as the gold standard for dividend ETFs. That’s primarily because very few ETFs can consistently outperform it over the long term. However, that doesn’t mean it is the only one you should hold.
Other ETFs have outperformed it, and some have done so while paying higher yields. Diversifying into these ETFs is a good idea just in case the index SCHD tracks (Dow Jones U.S. Dividend 100 Index) underperforms.
It is also an even better idea to look into monthly dividend ETFs. These ETFs compound faster and are more convenient if you want to compound your holdings over decades or get paid more frequently if you are retired.
The following three dividend ETFs combine both those qualities.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO) has a portfolio of ~20-25 holdings that have a long track record of growing earnings and dividends. It invests at least 80% of its assets in dividend stocks and uses a tactical covered call strategy to opportunistically sell call options on dividend holdings.
This lets the fund generate more dividends than it otherwise would without putting an overly restrictive cap on the upside potential. This approach aims to deliver gross annual income of roughly 2-3% from dividends and 2-4% from options.
DIVO has returned 108.25% over the past 10 years. That’s 8.72% per year, compared to 85.76% overall for the SCHD and 7.31% per year. The gap has widened more recently.
DIVO yields 4.73% and pays monthly, whereas SCHD yields 3.82% and pays quarterly.
The total expense ratio is slightly on the higher end at 0.56%, or $56 per $10,000.
SPDR Dow Jones Industrial Average ETF Trust (DIA)
SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA:DIA) is a passive, exchange-traded unit trust that owns the 30 blue-chip U.S. stocks that make up the Dow Jones Industrial Average. These 30 blue-chip stocks are more skewed towards financials, technology, and industrials, so DIA has managed to perform better.
Goldman Sachs (NYSE:GS) makes up the biggest holding, with a 10.68% weight, followed by Microsoft (NASDAQ:MSFT) and Caterpillar (NYSE:CAT) at 6.82% and 6.26%, respectively.
DIA often behaves a bit differently from the S&P 500, but over the long haul, it has delivered solid total returns with slightly lower volatility and higher dividends.
Over the past 10 years, DIA has returned 156.81%, or 9.89% per year. This is mostly due to the ETF outperforming the SCHD during rallies as it skews more towards financials and tech.
The yield is 1.46% and the expense ratio is among the cheapest you can find at 0.16%. If you aren’t worried about the dividend yield and you want to get paid monthly while keeping up with the broader market, this is a great pick.
Amplify CWP Growth & Income ETF (QDVO)
Amplify CWP Growth & Income ETF is actively managed and invests in “growth-oriented stocks” while giving you monthly income. The income is amplified by option premiums, much like DIVO.
But unlike DIVO, QDVO places a bigger emphasis on capital appreciation instead of income. The biggest holdings have significant exposure to the AI megatrend, and this has allowed QDVO to eke out higher gains. Of its top 10 holdings, every single one except Netflix (NASDAQ:NFLX) is an AI bet.
Nvidia (NASDAQ:NVDA) constitutes 10.19% of its holdings, followed by Apple (NASDAQ:AAPL) at 9.45% and Microsoft at 8.64%.
If the AI rally continues, QDVO will pay you handsomely every month. It is fairly new, but it can outperform if the AI “irrational exuberance” goes on for years.
QDVO yields 11.66% with an expense ratio of 0.55%, or $55 per $10,000.
Since its inception, QDVO has delivered 26.66%, or 24.28% per year in total returns.
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