Personal Finance

Retirees: 3 Infrastructure ETFs to Buy for the Rebuilding of America

Joey Frenette

Published: January 12, 2025 2:33 pm

Retirees looking to invest in long-life cash flow-generative assets to help bolster their portfolio’s dividend growth and diversification may wish to check out some of the infrastructure plays. Indeed, these predictable, easy-to-understand businesses will continue pulling in the cash flow, regardless of how far the U.S. economy climbs or falls over the next several years. But it’s not just the predictability of cash flows and relatively modest valuations that may make the infrastructure plays so intriguing at a time like this.

With Donald Trump, a man who’s all for spending to modernize America’s infrastructure, to be inaugurated in just over a week, many of the top infrastructure companies committed to rebuilding and renovating vital American infrastructure may stand to feel more of a tailwind moving forward. If America’s economy is to continue driving at full speed, its infrastructure must catch up, especially as new technologies and innovations look to hit the roads and sidewalks (think autonomous vehicles and the rise of physical AI).

For retirees looking for a more passive approach to play the modernization of America’s infrastructure, here are three intriguing exchange-traded funds (ETF) that are worth adding to the watchlist for this year:

Global X U.S. Infrastructure Development ETF

The Global X U.S. Infrastructure Development ETF (PAVE) is a fantastic ETF product if you’re looking to bet on an acceleration in the American infrastructure projects under the Trump administration. The ETF provides a relatively good mix of firms across numerous corners of the infrastructure scene, ranging from raw materials to construction and engineering services, equipment manufacturing, and even transportation services.

Underneath the hood, you’re gaining exposure to firms that are critical to revitalizing America’s aging infrastructure. The PAVE ETF boasts a 0.47% total expense ratio and a 0.54% dividend yield. Recently, shares fell into a correction, plunging close to 13% from its November peak. Undoubtedly, the “Trump bump” looks to have worn off in the weeks following President-elect Donald Trump’s presidential victory, making the ETF a less-crowded and perhaps opportunistic way to play the long haul with America’s infrastructure, which is long overdue for major upgrades.

If you’re looking for a well-diversified infrastructure ETF looking to stand tall under a pro-infrastructure administration, the PAVE is a magnificent option with its 100 or so holdings, none of which contribute more than 4% of the fund.

iShares U.S. Infrastructure ETF

The iShares U.S. Infrastructure ETF (IFRA) is another great infrastructure option that’s been the retreat of late, down around 12% from its November peak. With a five-star Morningstar rating and a very competitive expense ratio of 0.3%, the IFRA ETF appears to be one of the most cost-effective ways to bet on America’s great rebuild. Also, it’s a five-star fund, according to Morningstar (NASDAQ:MORN).

While the PAVE ETF is well-diversified, the IFRA takes diversification to the next level, with more than 150 holdings, none of which comprise more than 1% of the fund. Additionally, you’re gaining a very heavy weight (more than 42%) in the utility sector. Of course, utilities are known for their relative stability. So, if you’re looking for a slightly less choppy ride (IFRA’s beta is 1.11 vs. 1.33 for PAVE) and a fatter dividend yield (1.75% vs. 0.54% for PAVE), the IFRA may be the better option for you.

With the lower fees and larger yield, I do view the IFRA as being a better fit for more retirees who need the passive income boost.

SPDR S&P Global Infrastructure ETF

Finally, the SPDR S&P Global Infrastructure ETF (NYSEARCA:GII) is an attractive option for retirees seeking international diversification and an even greater yield. Undoubtedly, if other nations follow in America’s footsteps by ramping up infrastructure spending, the GII could stand tall relative to the U.S.-focused options. Of course, you will feel less of the Trump bump, given the broad range of international infrastructure names you’ll be exposed to with the fund.

The biggest reason for preferring the GII as a retiree is the 3.23% dividend yield and 0.85 beta (far lower than the other two ETFs mentioned). Also, the 0.4% expense ratio is fair, given the broad range of global infrastructure names you’ll get from the fund.