Dividend ETF


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.


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.

  1. Dividend

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  2. Intraday

    Another way of saying "within the day". Intraday price movements ...
  3. Intelligent ETF

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  4. Expense Ratio

    A measure of what it costs an investment company to operate a ...
  5. Yield

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

    An investment strategy that aims to balance risk and reward by ...
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  1. Is a company allowed to reduce its dividends?

    Yes. Companies have no restrictions - not from their exchange (NYSE, Nasdaq, AMEX, etc.), the SEC or the NASD - that require ... Read Full Answer >>
  2. Can mutual funds only hold stocks?

    There are some types of mutual funds, called stock funds or equity funds, which hold only stocks. However, there are a number ... Read Full Answer >>
  3. How do mutual funds compound interest?

    The magic of compound interest can be summed up as the concept of interest making interest. On the other hand, simple interest ... Read Full Answer >>
  4. Do mutual funds pay interest?

    Some mutual funds pay interest, though it depends on the types of assets held in the funds' portfolios. Specifically, bond ... Read Full Answer >>
  5. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
  6. Why have mutual funds become so popular?

    Mutual funds have become an incredibly popular option for a wide variety of investors. This is primarily due to the automatic ... Read Full Answer >>

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