At 60 and above, many people start thinking differently about investing. At this stage of life, the main goal shifts to steady passive income instead of rapid mega-growth.
To achieve this, investors can use exchange traded funds (ETFs) that pay out dividends periodically. The good news is that you don’t need to find dozens of them; if you can just identify a few high-yield dividend funds, you can effectively turn your portfolio into a passive income machine.
Certain ETFs have the potential for share-price appreciation while also providing good yield. Along with those criteria, investors age 60+ should look for wide diversification in order to mitigate any concentration risk. I found three funds that meet these strict expectations, and I’m going to share them with you right now.
Vanguard High Dividend Yield ETF (VYM)
Income-focused investors at age 60 or above can start off with the Vanguard High Dividend Yield ETF (NYSEARCA:VYM | VYM Price Prediction). When diversification is a main objective, the VYM ETF stands out because it includes 563 stocks in its holdings list.
Why would you want such a broadly diversified fund? The reason is that you’re not relying too much on one stock or even one market sector. In other words, you’re spreading the risk across hundreds of stocks, many of which aren’t correlated to each other.
Just to provide a small sample, you’ll find diverse stocks like Procter & Gamble (NYSE:PG), Broadcom (NASDAQ:AVGO), Walmart (NYSE:WMT) and JPMorgan Chase (NYSE:JPM) in the VYM ETF. It makes a lot of sense to own a de-risked fund like the Vanguard High Dividend Yield ETF when you’re investing at 60+.
Furthermore, you’ll get a 2.34% annual dividend yield with the VYM ETF, which is higher than many index-tracking funds. If you reinvest the dividend distributions, your income-generating potential could be substantial with the Vanguard High Dividend Yield ETF.
Now, you may be aware that ETFs will generally deduct management fees from the share price. This is true for the Vanguard High Dividend Yield ETF, but this fund doesn’t charge much.
In fact, the VYM ETF has an expense ratio of just 0.04%. This translates to management fees of $0.04 per year for every $100 invested in the fund, which isn’t exorbitant at all. Therefore, the Vanguard High Dividend Yield ETF is an all-around great pick for income-seeking investors today.
Schwab International Dividend Equity ETF (SCHY)
Selection number two for people in the 60+ age cohort is the Schwab International Dividend Equity ETF (NYSEARCA:SCHY). To sum it up quickly, the SCHY ETF specializes in non-U.S.-based businesses that offer high dividend yields.
A main benefit of international investing is that you can find great opportunities around the world while diversifying your portfolio. You don’t need to be an expert at multi-regional stock picking because the Schwab International Dividend Equity ETF does the research and allocation on your behalf.
In the holdings list of the SCHY ETF you’ll find carefully chosen stocks representing a wide array of businesses. A few examples are TotalEnergies (NYSE:TTE), Vinci (OTC:VCISY),Roche Holding (OTC:RHHBY) and Wesfarmers Limited (OTC:WFAFY).
In total, there are 136 stocks on the holdings list of the Schwab International Dividend Equity ETF. It’s convenient to let the fund’s managers pick out all of those international stocks, you must admit.
Besides, the costs are quite reasonable as the SCHY ETF’s annual expense ratio is only 0.08%. Plus, you can boost your passive income power with the Schwab International Dividend Equity ETF as this fund sports an attractive 3.55% annual dividend yield.
Fidelity High Dividend ETF (FDVV)
One more prime selection that’s perfect for 60+ investors is the Fidelity High Dividend ETF (NYSEARCA:FDVV). With 106 stocks on its list of holdings, the FDVV ETF lives up to its name by emphasizing stocks with high dividend yields.
These aren’t excessively risky mega-yield stocks, though. Instead, the Fidelity High Dividend ETF sticks to names that are solid and familiar, but which also happen to pay decent dividends.
Some examples of stocks included in the FDVV ETF are Philip Morris International (NYSE:PM), ExxonMobil (NYSE:XOM), Visa (NYSE:V) and JPMorgan Chase (NYSE:JPM). You probably won’t go wrong if you’re invested in market-sector leaders like these.
Regarding the costs of this fund, the Fidelity High Dividend ETF deducts an annualized expense ratio of 0.15%, which isn’t terribly high. And for passive income seekers at age 60 or above, the FDVV ETF may be irresistible as it offers a 2.81% annual yield. So, you’re invited to add this fund to your list of must-haves for reliable, diversified income potential.
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