Two Lucrative Dividend ETFs You Can Acquire for $200 in September and Retain Indefinitely

Essential Insights

• A duo of high-yield dividend ETFs presents yields of 3.7% and 4% at current prices.
• The Schwab US Dividend Equity ETF has been incrementing its distribution at a robust 7.6% annual rate over the past five-year period.
• Since 2020, the Vanguard International High Dividend Yield ETF has augmented its payout by 13.3% per annum.

Establishing a dependable dividend income flow doesn’t necessitate substantial capital or intricate stock selection tactics. In reality, $200 is sufficient to acquire shares of two ETFs that offer promising prospects at present.

The Schwab US Dividend Equity ETF and the Vanguard International High Dividend Yield ETF provide investors with considerable exposure to numerous top-tier dividend-paying enterprises based in the United States and overseas. Most advantageously, with $200, you could purchase shares of both and still have spare change for refreshments.

What’s the operational mechanism of these dividend ETFs?

Both the Schwab US Dividend Equity ETF and the Vanguard International High Dividend Yield ETF are passively managed funds that monitor specific indices. The Schwab US Dividend Equity ETF adheres to the Dow Jones US Dividend 100 Index.

The Schwab US Dividend Equity ETF exclusively considers American corporations that have escalated their distributions for a minimum of 10 successive years, excluding real estate investment trusts (REITs). Entities that meet this criterion are assigned a composite score based on leverage, dividend yield, and five-year dividend growth rates.

The Dow Jones US Dividend Index is confined to 100 companies with the highest composite scores, weighted according to their market capitalization. This market cap weighting implies that the largest entities have the most significant impact on performance. As of September 2, the two largest holdings were Chevron and ConocoPhillips.

The Vanguard International High Dividend Yield ETF follows the FTSE All-World ex US High Dividend Yield Index. It’s an extensive index encompassing over 1,500 stocks, despite excluding U.S.-based businesses and REITs. The index passively selects for key attributes including market cap and dividend yield. At July’s end, Nestlé and Roche were its two principal holdings.

What do these dividend ETFs offer?

Following a stock split last year, the Schwab US Dividend Equity ETF has been trading at a highly accessible price of approximately $28 per share. Projecting its last four dividend payments forward, investors purchasing at current prices could receive a 3.7% yield in the coming year.

A notably higher yield in future years appears more probable than stagnation for the Schwab US Dividend Equity ETF. The quarterly distribution this ETF delivers has expanded by 7.6% annually over the past five years.

Shares of the Vanguard International High Dividend Yield ETF are pricier at a recent value of around $83 per share, but they may well be worth the investment. This ETF’s quarterly dividend payout has risen by 13.3% annually over the past five years. Even if future distributions align with last year’s, investors acquiring shares at current prices could potentially receive a 4% yield over the next 12 months.

Both the Schwab US Dividend Equity ETF and the Vanguard International High Dividend Yield ETF are passively managed. Without active fund managers to compensate, they boast low expense ratios. This ensures that nearly all the gains their underlying indexes generate reach your account.

The Vanguard International High Dividend Yield ETF carries an expense ratio of 0.17%. It’s slightly elevated due to tracking international stocks. The Schwab US Dividend Equity ETF comes with a considerably lower 0.06% expense ratio.

Why choose between them?

The Schwab US Dividend Equity ETF has lagged behind the Vanguard International High Dividend Yield ETF over the past five years, but this trend may not persist in the future. Rather than concentrating all your resources in one area, dividing your investment between the two is an excellent strategy to maintain a geographically diversified portfolio.