World Stock Watch

Secure Your Retirement with These 8 Essential Index ETFs

As you approach retirement or are already enjoying your golden years, it’s crucial to have a reliable income stream to support your living expenses. One effective way to achieve this is by investing in dividend-paying stocks, which can provide a regular source of cash and potentially increase in value over time.

The Power of Dividend-Paying Stocks

Dividend-paying stocks are often associated with established companies that have a history of distributing a portion of their earnings to shareholders. This can be an attractive option for retirees, as it provides a relatively stable source of income. Moreover, dividend-paying stocks tend to outperform non-dividend payers, making them a compelling addition to any investment portfolio.

A Closer Look at the Numbers

According to a report by Hartford Funds, dividend-paying stocks have consistently outperformed non-dividend payers over the past several decades. The data reveals that:

• Dividend growers and initiators have averaged an annual total return of 10.19%
• Dividend payers have averaged an annual total return of 9.17%
• Non-dividend payers have averaged an annual total return of 4.27%

8 Essential Index ETFs for Retirees

To make the most of dividend-paying stocks, consider investing in index ETFs that track a specific market index. Here are eight essential index ETFs that can provide a reliable income stream and potentially grow in value over time:

1. iShares Preferred & Income Securities ETF (PFF): Tracks the ICE Exchange-Listed Preferred & Hybrid Securities Index, offering a 6% yield and a 5-year average annual return of 3.29%.
2. Schwab U.S. Dividend Equity ETF (SCHD): Tracks the Dow Jones U.S. Dividend 100 Index, offering a 3.6% yield and a 5-year average annual return of 13.6%.
3. iShares US Real Estate ETF (IYR): Tracks the Dow Jones U.S. Real Estate Capped Index, offering a 2.7% yield and a 5-year average annual return of 4.2%.
4. Vanguard High Dividend Yield ETF (VYM): Tracks the FTSE High Dividend Yield Index, offering a 2.7% yield and a 5-year average annual return of 11.8%.
5. SPDR S&P Dividend ETF (SDY): Tracks the S&P High Yield Dividend Aristocrats Index, offering a 2.3% yield and a 5-year average annual return of 10%.
6. iShares Core Dividend Growth ETF (DGRO): Tracks an index of U.S. stocks with a history of consistently growing dividends, offering a 2.2% yield and a 5-year average annual return of 12.8%.
7. Vanguard Dividend Appreciation ETF (VIG): Tracks the S&P US Dividend Growers Index, offering a 1.7% yield and a 5-year average annual return of 13.3%.
8. Vanguard S&P 500 ETF (VOO): Tracks the S&P 500 Index, offering a 1.2% yield and a 5-year average annual return of 16.4%.

Investing in Your Future

These eight index ETFs offer a reliable way to generate income and potentially grow your wealth over time. By incorporating them into your investment portfolio, you can create a sustainable income stream that will support your living expenses throughout your retirement years.