Investing in dividend stocks can be a great way to create a source of passive income while also building a healthy investment portfolio. However, picking stocks can be challenging, especially if you don't get excited about digging into a company's financials and doing loads of research.
Fortunately, there's an easier way to invest in dividend stocks. A dividend ETF is a collection of dividend-paying stocks all grouped together into a single investment. You don't need to worry about choosing stocks or deciding when to buy or sell. All you have to do is invest consistently and be patient as your money grows.
With a dividend ETF, you not only earn returns on your investments themselves, but you'll also receive a dividend payment each quarter or year. With these ETFs, you can potentially become a millionaire investor with minimal effort.
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1. Vanguard Dividend Appreciation ETF (VIG)
The Vanguard Dividend Appreciation ETF (VIG +0.41%) tracks the NASDAQ U.S. Dividend Achievers Select Index. It contains just over 200 stocks that have consistently increased their dividends every year, and some of the largest companies in the fund include Microsoft, Walmart, and Johnson & Johnson.
Since the fund's inception in 2006, it has experienced an average return of close to 10% per year. If you were to invest just over $500 per month in this fund while earning a 10% annual rate of return, you'd have around $1 million saved after 30 years.
You'll also receive dividend payments each quarter. Exactly how much you'll collect in dividends depends on how many shares you own, but over the past year, this fund has paid out between $0.50 and $0.70 per share each quarter. That may not sound like much, but when you own hundreds or thousands of shares, those dividends add up.
2. ProShares S&P 500 Aristocrats ETF (NOBL)
The ProShares S&P 500 Aristocrats ETF (NOBL +0.63%) is a smaller, more exclusive fund. It only contains stocks from the Dividend Aristocrats, which are companies in the S&P 500 that have increased their dividends every year for at least 25 consecutive years.
This fund contains 65 stocks, so it isn't as diversified as some other ETFs.However, these names are considered the best of the best when it comes to dividends.
Founded in 2013, this fund has earned an average return of around 12% per year. To become a millionaire with this ETF, you'd need to invest around $350 per month and earn a 12% annual return for 30 years. The fund also pays a quarterly dividend of around $0.40 to $0.50 per share.
3. Schwab U.S. Dividend Equity ETF (SCHD)
The Schwab U.S. Dividend Equity ETF (SCHD 0.10%) tracks the Dow Jones U.S. Dividend 100 Index, and it includes just over 100 stocks with a strong track record of increasing their dividends.
Since the fund's inception in 2011, it has earned an average return of around 14% per year. To accumulate at least $1 million, you'd need to invest around $250 per month and earn a 14% annual return over 30 years. In addition, the fund pays quarterly dividends of around $0.40 to $0.60 per share.
Investing in dividend stocks can be a smart move, whether you're looking to create a diverse portfolio of investments or create a source of passive income for the future. With these ETFs, you can generate long-term wealth with next to no effort.
