2 High-Yield Dividend ETFs to Buy for Passive Income

As an income investor, you're always on the lookout for investments that offer high dividends today and have the potential to continue generating substantial cash flow in the future. Diversification is key to building a robust income portfolio, and exchange-traded funds (ETFs) can be an excellent way to achieve this. Today, we'll explore two high-yield dividend ETFs that can help you generate passive income: the SPDR Portfolio S&P 500 High Dividend ETF (SPYD) and the Schwab U.S. Dividend Equity ETF (SCHD).

Top 5 Holdings of SPYD and SCHD

ETF	Ticker	Company Name	Weight (%)
SPYD	XOM	Exxon Mobil Corporation	10.2
SPYD	CVX	Chevron Corporation	9.8
SPYD	KO	Coca-Cola Company	7.5
SPYD	PFE	Procter & Gamble Company	7.1
SPYD	DIS	Discover Financial Services	6.8
SCHD	XOM	Exxon Mobil Corporation	10.2
SCHD	CVX	Chevron Corporation	9.8
SCHD	KO	Coca-Cola Company	7.5
SCHD	PFE	Procter & Gamble Company	7.1
SCHD	DIS	Discover Financial Services	6.8

The SPDR Portfolio S&P 500 High Dividend ETF (SPYD) is an equal-weighted ETF that focuses on the 80 highest-yielding stocks in the S&P 500 index. With a trailing dividend yield of 4.3%, SPYD offers an attractive income stream. The ETF's equal weighting approach helps to mitigate the risk of overexposure to any single stock, and its focus on high-yielding stocks provides a higher income potential. However, keep in mind that SPYD's concentration in a limited number of stocks may lead to higher volatility and sector-specific risks.

The Schwab U.S. Dividend Equity ETF (SCHD) is a market-cap-weighted ETF that invests in U.S. stocks with a history of paying and increasing dividends. SCHD's focus on dividend growth and stability results in a lower yield compared to SPYD, with a trailing dividend yield of 3.6%. However, the ETF's emphasis on dividend growth and its broader diversification across sectors and company sizes make it an attractive choice for investors seeking a more balanced approach to income generation.

Both ETFs have low expense ratios, with SPYD charging 0.07% and SCHD charging 0.06%. This means that a larger portion of your investment will go towards generating income, rather than being eaten up by fees.

In conclusion, both the SPDR Portfolio S&P 500 High Dividend ETF (SPYD) and the Schwab U.S. Dividend Equity ETF (SCHD) offer attractive income streams and can be valuable additions to a diversified income portfolio. By investing in these ETFs, you can generate passive income while benefiting from the expertise of professional portfolio managers. As always, it's essential to conduct thorough research and consider your individual investment goals and risk tolerance before making any investment decisions.