One of the most popular investment vehicles of the 21st century, ETFs, are known for many things like helping savvy investors diversify their holdings, giving the opportunity to leverage your money through securities, and consistent returns.
One question you may have is - do ETFs pay dividends. This is a valid question since dividends are more closely related to mutual funds compared to regular stocks. This coupled with the fact that mutual funds pay interest not dividends poses an interesting question - do ETFs pay dividends?
The simple answer is yes - some ETFs do indeed pay dividends. ETF dividends are a lot like regular stock dividends - they pay out a certain amount of money per share of a company on a regular payment schedule. As normal - most ETFs pay quarterly and quite a few also pay monthly. Semi-annual and annual payments do exists but are also rare.
In this section of this post we will be going over some different types of dividend paying etfs and with some tickers for you to check out!
Some of the most popular dividend ETFs that exist track the S&P 500 index. These stocks boast around an 8% average increase in stock price plus modest 1-2.5% dividend yields usually paid out quarterly. Some popular ETFs in this category are VSP.TO and VOO.
Another popular ETF type is REITs. These ETFs hold a lot of REIT stocks delivering large dividends. These stocks have very low average increase in stock price but boats an above average 4-8% dividend yield usually paid out monthly. Some popular ETFs in this category are VRE.TO and VNQ.
Another very popular ETF type is Bonds. These ETFs hold a lot of either corporate or government bonds delivering modesnt dividends. These stocks have very low average increase in stock price but boats an average 1.5-2.5% dividend yield usually paid out monthly. Some popular ETFs in this category are VCB.TO, VGV.TO, and VBMFX.
Overall, many ETFs pay decent dividends to their investors. Although some sectors like real estate and bonds pay more consistent dividends - even growth ETFs like the S&P 500 tracking fund pay modest dividends.
As always - this post is not to be taken as financial advice. Please consult a financial advisor before making any financial decisions.