5 Dividend ETFs to Hold Forever - Easy Millions

Summary

This video script offers an in-depth review of the top 5 dividend ETFs for long-term investment, focusing on historical performance, positive price growth, non-overlapping holdings, and distinct dividend strategies. It highlights the Amplify CWP Enhanced Dividend Income ETF for its unique options strategy, VanEck Energy Income ETF for targeting MLPs, Schwab US Dividend Equity ETF for its focus on established dividend payers, JP Morgan's Equity Premium Income ETF for its active management, and Wisdom Tree US Quality Dividend Growth Fund for its hybrid approach of growth and dividends. The script also discusses the importance of understanding fund performance and the potential for each ETF to contribute to a diversified and wealth-building portfolio.

Takeaways

• 💰 The video discusses the potential of dividend investments to grow wealth rapidly.
• 🌐 There are over 9000 ETFs globally, but the focus is on the top dividend ETFs suitable for long-term investment.
• 🔍 The presenter plans to review the top 5 dividend ETFs that can be held indefinitely, aligning with a 'forever' investment strategy.
• 🏆 The main criteria for selecting these ETFs include historical performance, positive price growth, less than 50% overlap in holdings, and distinct dividend strategies.
• 📈 The first ETF reviewed is Amplify CWP Enhanced Dividend Income ETF (DEVO), which uses a unique strategy of generating income from dividends and option premiums.
• 📊 DEVO has the highest expense ratio of the group at 0.56% and offers a dividend yield of 4.6%, with a focus on top-performing companies from the S&P 500.
• 📉 The second ETF is VanEck Energy Income ETF (EINC), targeting MLPs which are pass-through entities typically associated with resource-related companies.
• 🛢️ EINC has a high expense ratio of 0.46% and a dividend yield of 3.61%, with a strategy that benefits from low-interest rates.
• 💼 The third ETF is Schwab US Dividend Equity ETF (SCHD), known for including companies with a strong history of dividend payments and growth.
• 💼 SCHD has the lowest expense ratio at 0.06% and a dividend yield of 3.53%, making it a popular choice among investors.
• 📊 The fourth ETF is JP Morgan's Equity Premium Income ETF (JEPI), which actively manages its portfolio by selling options for additional income.
• 📈 JEPI offers the highest dividend yield of the group at 7.68%, with an expense ratio of 0.35%, but has a limited track record.
• 🌱 The fifth ETF is Wisdom Tree US Quality Dividend Growth Fund (DGRW), a hybrid focusing on both dividends and growth, with a lower expense ratio and the lowest dividend yield of the group.
• 📊 DGRW has shown strong performance over the past 12 months with a total return of 20% and the best five-year total return among the reviewed ETFs.
• 🔄 The script concludes with an analysis of the overlap in holdings among the reviewed ETFs, with DEVO and DGRW having the highest overlap at 28%.

Q & A

What is the main focus of the video script?

The main focus of the video script is to review the top 5 dividend ETFs that a person can potentially buy and hold forever, based on certain criteria such as historical performance, positive price growth, non-overlapping holdings, and distinct dividend strategies.

What does the term 'ETF' stand for?

ETF stands for Exchange Traded Fund, which is a type of investment fund and traded on stock exchanges, much like individual stocks.

Why is it important to consider the historical performance of dividend ETFs?

Historical performance is important as it gives an indication of how the ETF has performed in the past, which can be a useful predictor of future performance, especially for long-term investment strategies.

What is the significance of positive price growth in the context of dividend ETFs?

Positive price growth ensures that the ETF is not just offering dividend growth but also increasing in overall value over time, avoiding the risk of dividend traps where the company pays high dividends but is losing overall value.

Why is it suggested to avoid funds that overlap with one another more than 50%?

Avoiding high overlap ensures diversification in the investment portfolio, reducing risk and preventing the redundancy of having several funds with identical or very similar holdings.

What is the Amplify CWP Enhanced Dividend Income ETF's strategy for generating income?

The Amplify CWP Enhanced Dividend Income ETF's strategy is to generate 4% to 7% of its income from dividends and option premiums by writing call options on the top 25 outperforming companies within the S&P 500 holdings.

What is the VanEck Energy Income ETF's focus and what type of companies does it typically invest in?

The VanEck Energy Income ETF focuses on investing in Master Limited Partnerships (MLPs), which are pass-through entities typically associated with resource-related companies such as those in the gas, oil, coal, and timber industries.

What is the significance of the dividend yield in evaluating an ETF's performance?

The dividend yield indicates the annual dividend income an investor can expect to receive from the ETF, expressed as a percentage of the ETF's share price. It is a key factor for income-focused investors.

How does the Schwab US Dividend Equity ETF select its holdings?

The Schwab US Dividend Equity ETF selects its holdings based on companies with a long track record of dividends and dividend growth, ensuring the fund consists of high-quality dividend-paying equities.

What is the difference between the strategies of the JP Morgan Equity Premium Income ETF and the Amplify CWP Enhanced Dividend Income ETF?

While both ETFs use an active management strategy involving selling options to generate additional income, the JP Morgan Equity Premium Income ETF has a larger number of holdings and offers nearly double the dividend yield of the Amplify CWP ETF, but at a lower expense ratio and with a shorter track record.

What is the Wisdom Tree US Quality Dividend Growth Fund's approach to selecting its holdings?

The Wisdom Tree US Quality Dividend Growth Fund focuses on forward-looking earnings estimates along with historical return on assets and return on equity growth for its selection, making it a hybrid ETF that combines both growth and dividend potential.

Why is it important to consider the overlap of holdings among different ETFs?

Considering the overlap of holdings is important for ensuring diversification and avoiding concentration risk. It helps investors to understand the unique value each ETF brings to their portfolio.

What is the significance of the compound annual growth rate (CAGR) in evaluating an ETF's performance over time?

The CAGR provides a measure of an ETF's growth rate over a specified period of time, compounding the return each year, which helps investors understand the average annual growth rate of the investment.

How does the video script address the potential for personal bias in the ETF recommendations?

The script acknowledges that the investments discussed may be ones the speaker is researching or already owns, but emphasizes that these may not necessarily be the best for the viewer. It encourages viewers to understand the speaker's mindset and make their own decisions.

What is the role of the sponsor, Nevada Canyon Gold, in the context of the video script?

Nevada Canyon Gold is the sponsor of the video, mentioned as an example of a company that has performed well in the past year and operates in the gold industry, which is noted for its stability during recessions.