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You can spend countless hours screening thousands of stocks individually to determine their annual dividend rates or simply invest in ETFs that offer a high yield.
High-yield ETFs offer you assets in a basket of companies that reward their shareholders with regular dividends. With a few right investments, these outsized payouts can become a reliable source of income for you. If you’re a long-term investor looking for stocks with above-average dividends, high-yield ETFs are a solution for your financial needs.
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High-Yield ETFs Biggest Gainers and Losers
Here’s a list of high-yield ETFs on the stock exchange with the most profits and losses.
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Invesco High Yield Equity Dividend Achievers ETF
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ProShares Ultra High Yield ETF
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Invesco BulletShares 2027 High Yield Corporate Bond ETF
Buy HYLS Stock – Trade for Free
First Trust Tactical High Yield ETF
Buy FDHY Stock – Trade for Free
Fidelity High Yield Factor ETF
Buy HYLV Stock – Trade for Free
IndexIQ ETF Trust IQ S&P High Yield Low Volatility Bond ETF
Buy HYLD Stock – Trade for Free
High Yield ETF
Buy HYDW Stock – Trade for Free
Xtrackers Low Beta High Yield Bond ETF
Buy HYG Stock – Trade for Free
iShares iBoxx $ High Yield Corporate Bond ETF
Buy HYGH Stock – Trade for Free
iShares Interest Rate Hedged High Yield Bond ETF
Buy GHYB Stock – Trade for Free
Goldman Sachs Access High Yield Corporate Bond ETF
Buy NUHY Stock – Trade for Free
Nuveen ESG High Yield Corporate Bond ETF
Buy SPHY Stock – Trade for Free
SPDR Portfolio High Yield Bond ETF
Buy HYGV Stock – Trade for Free
FlexShares High Yield Value-Scored Bond Index Fund
Buy SJB Stock – Trade for Free
ProShares Short High Yield
Buy IHY Stock – Trade for Free
VanEck International High Yield Bond ETF
Buy PHYL Stock – Trade for Free
PGIM Active High Yield Bond ETF
Buy HYUP Stock – Trade for Free
Xtrackers High Beta High Yield Bond ETF
Buy HYZD Stock – Trade for Free
WisdomTree Interest Rate Hedged High Yield Bond Fund
Why Invest in High-Yield ETFs?
Here are the top 3 reasons you should consider investing in high-yield ETFs.
1. High-yield ETFs are a good source of passive income.
You can create a steady and predictable source of income by investing in high-yield ETFs. Some of these ETFs issue monthly or quarterly dividends that can cover your menial expenses throughout the year.
Earlier this year, the S&P Dow Jones Indices announced that the companies listed on the S&P 500 Index were set to pay out more than $500 billion in dividends to shareholders. However, the COVID-19 outbreak might have caused that number to take a sharp fall. But the recent pledge from the Federal Reserve to buy undervalued corporate bonds has boosted some of the ETFs tracking these companies.
2. High-yield ETFs are cheaper than high-yield mutual funds.
As an investor, you must be familiar with ETFs and mutual funds. While both of these investment options are good for returns, you should be aware that in general, mutual funds cost more than ETFs.
There is an expense ratio that is involved with the purchase of mutual funds and ETFs. These expense ratios can range anywhere between 0.01% to 2.5% or more. ETFs with high yields are comparatively cheaper than mutual funds because ETFs are passively managed and reflect the performance of benchmark indices.
3. High-yield ETFs can help you plan for your retirement.
You can start planning for your retirement early by investing in high-yield ETFs. Map out your projected daily expenses and invest in ETFs that will pay you that much in cash as dividends.
Let’s say you need 3% of your overall capital for your expenses. You should aim for a total return of around 7% of your financial portfolio. You’ll need that buffer to cover the cost of expense ratios and capital gain taxes among other deductions. And if you still have 20 to 30 years before you retire, you can reinvest the dividends into these high-yield ETFs for better returns.
Top 3 High-yield ETFs by AUM
ETFs either distribute cash or stocks as dividends. You should invest in high-yield ETFs with cash dividends for instant liquidity rather than having to sell your stocks on the market at a later date for a payout.
Before investing in ETFs, you should evaluate the index performance, expense ratios, liquidity, historical returns record, annual dividend rates and total assets under management (AUM). You can consider these high-yield ETFs to give yourself a head start.
1. ProShares Short High Yield ETF
ProShares’ Short High Yield ETF (NYSEARCA: SJB) delivers daily inverse exposure to an index comprised of junk bonds, which have a high risk of default. The ETF is useful as a tool for implementing a tactical bet against the junk bond sector. The fund may be useful for establishing a short position over a longer period of time, though it may not be quite as useful if you want to invest in it as a long-term portfolio add-in.
2. iShares Interest Rate Hedged High Yield Bond ETF
iShares Interest Rate Hedged High Yield Bond ETF (ARCA:HYGH)
The iShares Interest Rate Hedged High Yield Bond ETF (NYSEARCA:HYGH) holds shares of iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and short positions in interest rate swaps. It was created to mitigate the interest rate risk of a portfolio composed of U.S. dollar-denominated, high-yield corporate bonds.
3. iShares Select Dividend ETF (NASDAQ: DVY)
iShares Select Dividend ETF has an expense ratio of 0.39%. It corresponds to Dow Jones U.S. Select Dividend Index and exposes you to dividend-paying stocks from the equity universe. This ETF has a total AUM of $13 billion.
iShares Select Dividend ETF trades over 1 million shares every day. It has an annual dividend rate of $3.68 and a dividend yield of 4.77%. iShares Select Dividend ETF has a 5-year return rate of 20.45%.
Best Online Brokers for High-Yield ETFs
You can find and invest in the top ETFs with an online broker. Most online brokers let you trade ETFs commission-free. Benzinga has handpicked the best online brokers to help you reach your financial goals.
TradeStation is an online broker equipped with an ecosystem of powerful trading technologies. You can open a TS SELECT account with a $2,000 minimum deposit or a TS GO account with a $0 minimum deposit.
With TradeStation, you can trade more than 2,000 ETFs that track indices, sectors, commodities and currencies. You can access and manage your account on desktop, web and mobile applications. TradeStation is regulated by the Financial Industry Regulatory Authority (FINRA).
Unlock a wide range of investment opportunities online with Firstrade. You can open an account on Firstrade without any minimum amount as a deposit.
Firstrade’s advanced technology makes it simple and seamless for you to execute your trading strategies. You can place and manage orders, view your positions and track the market from 1 screen using Firstrade Navigator. Firstrade is regulated by FINRA.
3. TD Ameritrade
TD Ameritrade is an industry-leading online broker that helps you trade with confidence and convenience. There is no minimum deposit required to open an account on this platform.
TD Ameritrade features a customizable dock to keep you updated with the latest stock market buzz from Yahoo! Finance. You can manage your portfolio on the web or mobile application. TD Ameritrade is regulated by FINRA.
Investments Driven by Dividends
High-yield ETFs are prone to high volatility. You should regularly monitor its performance and keep a tab on any dividend cuts. If the ETF dividend yield dips below your financial needs, don’t be afraid to sell your stocks and make a better investment that fulfills your monetary requirements.