"For most investors, this is a game to stick in for the long haul. That includes novice investors with decades ahead of them before they clock out for the last time and even retirees. The average retirement actually lasts around 20 years. And for a long-term stream of passive income, many investors are resorting to dividend ETFs. These professionally managed funds invest in sometimes hundreds of dividend paying stocks that deliver regular payments in addition to potential capital appreciation."
"But there are hundreds out there and not all are created equal. The top dividend ETFs screen companies for more than just yield. They look at strong financial indicators like revenue and cash flow. They may seek multiple avenues of generating income like selling options in addition to investing in stocks. They may also seek preferred stocks or those with less volatility compared to their peers."
"The Schwab U.S. Dividend Equity ETF (SCHD) is a very popular fund among dividend investors. It invests in high-quality companies known for consistently distributing high dividends as well as having strong fundamentals like earnings and cash flow relative to their peers. This screening process seems reliable as it goes beyond just handpicking stocks with high yields. In some cases, distressed companies offer higher than usual yields to attract investors."
Dividend ETFs provide a long-term passive-income solution by pooling hundreds of dividend-paying stocks to deliver regular payments and potential capital appreciation. Top dividend ETFs screen holdings for financial strength, including revenue and cash flow, and may pursue additional income sources such as selling options or holding preferred stocks to reduce volatility. Long-term investors, including retirees facing average retirements around 20 years, can benefit from diversified dividend ETFs. The Schwab U.S. Dividend Equity ETF (SCHD) targets high-quality companies with strong earnings and cash flow, tracks the Dow Jones U.S. Dividend 100 Index, yields about 4%, and concentrates in energy, consumer staples, and healthcare.
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