Look, I get it. The market’s been acting like a caffeinated squirrel lately, and you’re probably thinking about dividend stocks because they’re the financial equivalent of comfort food. Smart move, actually.
Here’s the thing about dividend stocks: they’re like that reliable friend who always shows up with pizza when you’re broke. These companies have their act together enough to literally pay you for owning their stock. Wild concept, right?
But instead of picking individual stocks (because who has time to research 50 companies?), let’s talk about two ETFs that do the heavy lifting for you.
The Tech-Heavy Overachiever: Fidelity High Dividend ETF (FDVV)
This fund is like that friend who somehow makes good money AND has their life together. It holds 123 stocks, with big names like NVIDIA, Microsoft, and Apple leading the charge. Yeah, tech stocks in a dividend fund – plot twist!
Here’s the deal: it pays out about 3.05% annually, which isn’t going to make you rich overnight, but it’s been crushing it performance-wise. We’re talking 8.2% returns this year alone. When you reinvest those dividends (which you absolutely should), that jumps to 16% over the past year.
The secret sauce? It focuses on companies that don’t just pay dividends – they grow them. It’s like compound interest, but with more steps and better marketing.
The High-Yield Value Play: Invesco S&P Ultra Dividend Revenue ETF (RDIV)
This one’s for people who want their dividends thicc. At 4.03% yield, it’s paying out more cash than its tech-heavy cousin. The trade-off? It’s stuffed with “boring” companies like US Bancorp, Chevron, and Best Buy.
Don’t let “boring” fool you – these are the companies that keep the lights on while everyone else is chasing the next shiny thing. The fund picks the 60 highest-yielding stocks from the S&P 900, then weights them by revenue (because size matters in business, apparently).
Returns have been more modest – 2.3% this year – but over five years, it’s delivered 16.6% total returns when you reinvest dividends. Not bad for a bunch of “boring” companies.
The Bottom Line
Here’s what nobody tells you about dividend investing: it’s not just about the cash payments. It’s about owning pieces of companies that are mature enough to share their profits instead of burning through cash like a startup founder at a tech conference.
FDVV gives you growth with income – perfect if you want to have your cake and eat it too. RDIV gives you higher income with steady, value-oriented companies – ideal if you prefer your investments like your relationships: stable and reliable.
Either way, you’re getting paid to wait while your investments (hopefully) grow. In a world where savings accounts pay basically nothing, that’s not a bad deal.
Just remember: past performance doesn’t guarantee future results, but it’s a hell of a lot better than keeping your money under a mattress.