While individual stocks have been the main dish of this column, exchange traded funds that pay dividends are another way to gain some income.
Unlike mutual funds, ETFs trade just like stocks in that they feature real-time pricing . ETFs can sometimes offer less day-to-day volatility than individual stocks.
Consider Vanguard High Dividend Yield (VYM).
This ETF is passively managed and tracks the performance of the FTSE High Dividend Yield index, which in turn tracks stocks with above-average yields.
The Vanguard High Dividend Yield fund is rated four out of five stars by investment research firm Morningstar.
Morningstar also rates the fund above average in terms of return in the large-cap value category on a three-year and five-year basis. With a beta of 0.81, the fund is less volatile than the S&P 500.
Although thousands of ETFs are available to choose from, many are thinly traded. The Vanguard High Dividend Yield fund is one of the more liquid names; its 50-day average volume is over 500,000 shares.
The fund pays dividends on a quarterly basis. At the end of March, Vanguard High Dividend ETF paid a quarterly rate of 32.8 cents. That gives an annualized yield of 3%.
Payouts can change from quarter to quarter. The yield on the S&P 500 is currently 2.4%.
As of the end of February, the ETF had 440 stocks in its portfolio. Its top holdings include corporate giants such as Exxon Mobil (XOM), Microsoft (MSFT) and Chevron (CVX).
Some of its holdings have announced dividend hikes this year.
Medical products firm Abbott Laboratories (ABT) announced its 40th annual dividend hike in February. The stock is extended after breaking out in late February. It was featured in this column Feb. 13.
Containership leasing firm TAL International Group (TAL) also lifted its shareholder payout in February. The stock is working on a new base and recently found support at its 10-week moving average.
B&G Foods (BGS) also increased its dividend in recent months. In February, the maker of Cream Of Wheat and Ortega Mexican products raised its dividend by 17%.
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