Dividend ETF

AAA

DEFINITION of 'Dividend ETF'

Any exchange-traded fund that seeks to provide high yields by investing in a basket of high-dividend-paying common stocks, preferred stocks or REITs. There are dividend ETFs that contain only U.S. domestic stocks and global dividend ETFs, which have an international focus. The indexes used to create dividend ETFs vary by fund manager or custodian, but most contain stocks with a high level of liquidity and above-market dividend yields.

INVESTOPEDIA EXPLAINS 'Dividend ETF'

Although dividend ETFs are passively managed around an index, that index may be the result of certain quantitative screens, such as companies with a history of increasing their dividends, or larger blue-chip companies with a higher level of perceived safety.


The expense ratios of dividend ETFs should be comparable to - or lower than - the cheapest no-load mutual funds with similar investment objectives. As with all ETFs, dividend ETFs can be traded intraday. These types of funds may be part of the core portfolio of an income-seeking or generally risk-averse stock investor.

RELATED TERMS
  1. Yield

    The income return on an investment. This refers to the interest ...
  2. Asset Allocation

    An investment strategy that aims to balance risk and reward by ...
  3. Expense Ratio

    A measure of what it costs an investment company to operate a ...
  4. Intraday

    Another way of saying "within the day". Intraday price movements ...
  5. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  6. Intelligent ETF

    An exchange-traded fund (ETF) that employs an active investment ...
Related Articles
  1. The Power Of Dividend Growth
    Investing Basics

    The Power Of Dividend Growth

  2. How And Why Do Companies Pay Dividends?
    Investing Basics

    How And Why Do Companies Pay Dividends?

  3. 6 Popular ETF Types For Your Portfolio
    Mutual Funds & ETFs

    6 Popular ETF Types For Your Portfolio

  4. All Weather Investing With ETFs
    Mutual Funds & ETFs

    All Weather Investing With ETFs

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center