6 Affordable ETFS for Dividend Aristocrats

Core Insights - The article emphasizes the importance of dividends as a critical indicator of investment value, highlighting that retail investors often focus on short-term market fluctuations rather than long-term returns driven by dividends [1][2]. Dividend Contribution to Returns - Over the past century, dividends have accounted for 31% of the total return of the S&P 500 on a pro-forma basis, with certain decades, such as the 1940s and 1970s, seeing dividends contribute over 50% of returns [2]. - Including dividends, the S&P 500's return from January 1930 to February 2025 would be 9,584 points, compared to just 278 points without dividends, illustrating the exponential impact of compounding [3]. Investment Vehicles - Several exchange-traded funds (ETFs) provide access to high-dividend stocks, allowing investors to benefit from dividend payouts without needing to identify individual stocks [3]. - A list of six ETFs is provided, each offering a combination of attractive price-to-earnings ratios and a strong dividend payout record, with one ETF focusing solely on dividend aristocrats [4]. ETF Details - iShares Select Dividend ETF (DVY): P/E ratio of 15.23, $20 billion in assets, 100 US stocks with five-year dividend records, expense ratio of 0.38% [5]. - Schwab US Dividend Equity ETF (SCHD): P/E ratio of 16.7, $69.7 billion in assets, tracks the Dow Jones 100 Dividend Index, expense ratio of 0.06% [5]. - Vanguard High Dividend Yield ETF (VYM): P/E ratio of 19.8, $81.2 billion in assets, tracks the FTSE High Dividend Yield Index, expense ratio of 0.06% [5]. - State Street SPDR S&P Dividend ETF (SDY): P/E ratio of 17.7, $19.5 billion in assets, corresponds to the S&P High Yield Dividend Aristocrats Index, expense ratio of 0.35% [5]. - iShares Core High Dividend ETF (HDV): P/E ratio of 20.7, $11.6 billion in assets, focuses on 75 dividend-paying domestic stocks, expense ratio of 0.08% [5]. - ProShares S&P 500 Dividend Aristocrats ETF (NOBL): P/E ratio of 21.3, $11.4 billion in assets, exclusively focuses on S&P 500 Dividend Aristocrats, expense ratio of 0.35% [5].