Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect stocks with solid dividend yields to reward shareholders over the long term, the Vanguard High Dividend Yield Index ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The Vanguard ETF's expense ratio -- its annual fee -- is a low 0.18%. Its dividend yield was recently a bit north of 3%.
This ETF has performed reasonably, but it's also very young, with fewer than five years on the books. It slightly underperformed the S&P 500 (INDEX: ^GSPC) over the past three years, but trounced it last year and is topping it so far this year. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a turnover rate of 34%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. Among these are two tobacco companies, Altria
Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. General Electric
Meanwhile, Boeing has some investors worried about expected losses on its new Dreamliner in the coming years, while United Technologies has surprised some with its plans to acquire sizable rival Goodrich.
The big picture
A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.