If individual stocks do not fit your risk appetite, then dividend-yielding ETFs could be a good alternative for you. In this clip from "Ask Us Anything" on Motley Fool Live, recorded on July 12, Motley Fool contributors Tyler Crowe and Lou Whiteman discuss some options for income-focused investors to consider.
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Tyler Crowe: REITs, utilities are good sectors. REITs, I think, are particularly compelling right now in a high inflation environment because the businesses themselves have the ability to offset inflation with price hikes and can pay commensurate dividends that raised that. A lot of them are getting hit particularly hard on valuation basis, and so there's actually quite a few rates right now that are looking very compelling with high safer yields. One of the interesting things that we have seen in the past 3-5 years is that the balance sheets for REITs is some of the best they've gone in 30 years. Basically, anything real estate right now is so bit by debt from the great financial crisis, credit quality across much of the real estate industries looks quite good.
Lou Whiteman: Yeah. If it really is about the income, I know Motley Fool, we preach individual stocks. But if you're dependent on the income, if you're at a point in your life where you need this income to pay the bills, maybe you get some dividend stocks, but I would look closely at dividend ETFs and just take your risk down that way. I'm a Vanguard customer, so I know the High Dividend Yield was VYM (VYM 0.02%), definitely VIG (VIG -0.08%) is their Dividend Appreciation. You can get a basket there. If it really is, and you need this to pay the bills, I would be more inclined to do something like that and then throw in a few, maybe, dividend favorites too. But if safe isn't the word, there's nothing safer, I think, than a good basket that take some of the risk away.