The 3 Best Dividend ETFs

The explosion in the number of exchange-traded funds is both good and bad. The good is obvious -- investors have more choice than ever before. The bad is that the boom has created hundreds of ETFs, some with just one twist that makes them ever so slightly different than another fund on the market. The boom is especially apparent in the hunt for dividend yield. To create the highest ETF yield, dividend stocks are becoming increasingly lumped together with no regard for quality. Dividend aristocrats are frequently combined with riskier alternatives. The best dividend ETF should offer a safe and reliable yield, like the funds below...

Vanguard High Dividend Yield ETF (NYSEMKT:VYM)tracks the FTSE High Dividend Yield Index, a diversified index of high-yielding American stocks. Though it isn't actively managed, the index does have some thoughtful features that have helped it outperform indexes over multiyear periods.iShares U.S. Preferred Stock ETF (NYSEMKT:PFF) fits the bill of offering relatively safe and reliable income, but with a yield higher than the stock market index. The fund yields about 5.8%, roughly 3.7 percentage points more than S&P 500 index funds, and carries a fair expense ratio of 0.47% of assets. Vanguard Dividend Appreciation ETF (NYSEMKT:VIG) tracks the NASDAQ U.S. Dividend Achievers Select Index, which includes stocks that have grown their dividends for 10 years in a row or more. It broadly excludes real estate investment trusts and limited partnerships from the index.

Source: Motley Fool

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