ETF’s are fantastic for the long term investor. The great thing about them is you don’t need to buy a ton of companies to be fully diversified. Most great ETF’s have a nice line that steadily rises over a long period of time. My portfolio consists of about 50% ETF’s and 50% single stocks. One thing to keep in mind with ETF’s is the management fees. Luckily most are pretty insignificant and I trust the professionals to manage it accordingly. They’re 2 ways you could go about ETF’s for diversification. You can either find ones that rely on heavily in one sector and have 1 per industry for example 100% energy, or you can find some that are already diversified in the different categories. I personally took the second option because I only wanted to own a few ETF’s and focus mainly on single stocks during this 2020 bear market. Remember, diversifying your portfolio is the best way to mitigate risk. Do not put all of your eggs in one basket. Try not to buy ETF’s with similar companies within its portfolio. This can cause a failure in diversification and hedge your progress. These numbers are current as of 25 March 2020.
NOBL – This is an index that tracks the performance of the S&P 500 Dividend Aristocrat index. It contains a minimum of 40 stocks. If you’re familiar with Dividend Aristocrats they are an extremely safe bet for dividend income not to mention are extremely reliable companies with great business models. At minimum they have been around for 25 years consecutively raising their dividend which is a huge feat. It pays out quarterly at $.44 per share with a current trading price of $55.56. Its management fee is 0.35% and has a nice steady rise of share price over the long term.
SPYD – This ETF seeks to track the performance of the S&P 500 High Dividend Index. It’s designed to measure performance of high dividend-yielding companies within the S&P 500. Current share price is $24.49 and pays a quarterly dividend of $.39 per share. The chart history shows a steady rise in share price and has a management fee of .07%
VYM – Vanguard High Dividend Yield ETF tracks high dividend yielding companies. It has huge stable companies many of which are Dividend Kings. If you are not familiar with Dividend Kings they are companies who have consecutively raised their dividend for the past 50 years. It trades at $67.15 and pays a quarterly dividend of $.77 per share. Its management fee is a whopping 0.05%. Vanguard is known for its extremely low management fees which directly support the investor.
VNQ – Vanguard real estate ETF is not your typical stock but a REIT. REITs are real estate investment trusts which can get you involved in real estate without putting in the work of renting out a home or property. REITs are required to pay out 90% of profits to the shareholders which is good for the investors. VNQ focuses on real estate companies only within the United States and trades at a share price of $65.30. Dividend is quarterly at $.95 per share and has a management fee of 0.11%.
VNQI – VNQI is essentially the same as VNQ except it focuses on international real estate companies. The kicker with this one is it pays a huge dividend compared to its share price. Trading at $42.45 it pays out a quarterly dividend of $3.65 which is absolutely phenomenal. Management fee is 0.1% which is quite frankly amazing compared to the value you’re getting.
BND – This is a vanguard bond ETF which kind of does the opposite of the current market. Bonds are typically safer than stocks but generally tend to perform a little less. I do not own much because I have a lot of time in my investing career, but it’s always a good idea to have a hedge against the US stock market. Trading at $85 it pays a monthly dividend of $.17 per share. Management fee is 0.02%
These ETF’s are my forever picks and I will never sell unless they somehow cut the dividend. If I find any one of my single stocks get over valued I will sell and distribute the accrued value into these ETF’s. No matter which path you take to diversify always invest with a margin of safety. I like only having a few ETF’s for the fact I can throw more money within and allow it my DRIP (dividend reinvestment plan) to perform better. I look forward to watching my portfolio skyrocket with increased share price and dividends received continuously compounding the interest.