High-yield ETFs are a popular choice for investors seeking income, but how do you choose between them? Global X SuperDividend U.S. ETF and SPDR Portfolio S&P 500 High Dividend ETF both target high-yield stocks, but they have different approaches. Which one should you consider for your portfolio?
SPDR Portfolio S&P 500 High Dividend ETF:
- Simple Selection Process: This ETF focuses on dividend-paying stocks within the S&P 500, which represents large companies in the U.S. These stocks are selected based on dividend yield, with the 80 highest-yielding stocks included in the ETF using an equal-weighting methodology.
- Reliance on S&P 500 Index: By relying on the S&P 500 index selection criteria, this ETF ensures that the included stocks are large and economically important companies, reducing the risk of investing in less desirable companies over time.
Global X SuperDividend U.S. ETF:
- Complex Screening Criteria: This ETF starts by evaluating stocks based on beta, dividend yield, and dividend payment history. It selects stocks with betas equal to or less than 0.85, dividend yields between 1% and 20%, and a consistent dividend payment track record.
- Risk Management: By using beta to select lower-volatility stocks and avoiding extremely high yields, this ETF aims to reduce risk in the portfolio. The equal-weighting methodology further helps mitigate individual stock risk.
Both ETFs have their strengths and weaknesses, but historical performance data tells an interesting story.
Conclusion:
In conclusion, if you are a long-term investor looking for stable dividend income, SPDR Portfolio S&P 500 High Dividend ETF may be the better choice due to its consistent performance and reliance on the S&P 500 selection criteria. On the other hand, if you are willing to take on slightly more risk for potentially higher yields, Global X SuperDividend U.S. ETF could be worth considering. Remember to conduct thorough research and consult with a financial advisor before making any investment decisions.
