Income-generating exchange-traded funds (ETFs) are becoming an appealing choice for investors looking for stability amid inflation, changing interest rates, and market volatility. Three established ETFs, each offering dividend yields above 3%, are poised to provide passive income through 2026.
The iShares Broad USD High Yield Corporate Bond ETF (USHY) focuses on high-yield or junk bonds, boasting nearly 2,000 holdings primarily rated BB or B. With assets exceeding $25.6 billion and a low expense ratio of 0.08%, USHY appeals to those willing to accept higher risk for a dividend yield of 6.68%. Its large diversification helps mitigate some associated risks, making it a notable option for aggressive income-seeking investors.
On a more global scale, the Vanguard Total International Bond ETF (BNDX) encompasses nearly 7,000 holdings across various countries, emphasizing investment-grade bonds. This fund offers a 4.36% dividend yield with an even lower expense ratio of 0.07%. As interest rates fluctuate in the U.S., BNDX’s international diversification provides a buffer against local market uncertainties, attracting approximately $75 billion in investments.
Additionally, the Vanguard FTSE Developed Markets ETF (VEA) focuses on equities from outside the U.S., such as Canada and Western Europe. VEA, which has an expense ratio of just 0.03%, presents an attractive combination of capital appreciation and dividend income, yielding 3.08%. With around $198 billion in assets, VEA has gained nearly 37% in the last year, significantly outperforming the S&P 500.
Investors are increasingly looking to these ETFs for solid passive income strategies as they navigate a complex financial landscape.
Why this story matters:
- These ETFs provide options for income-seeking investors in a volatile market.
Key takeaway:
- Established income-generating ETFs like USHY, BNDX, and VEA offer attractive dividend yields and diversification.
Opposing viewpoint:
- Some investors may prefer actively managed funds for potentially higher returns amidst market fluctuations.
