Dividend ETFs: Everything you need to know and my favorite for 2024

Dividend ETFs: Everything you need to know and my favorite for 2024

According to a report by www.aktienwelt360.de,

Dividend ETFs offer investors the opportunity to invest in stocks with continuous dividend income while spreading the risk. A well-known ETF that focuses on high-dividend stocks is the Deka DAXplus Maximum Dividend UCITS ETF. But the selection of stocks in dividend ETFs is not always based on the best criteria. ETFs often track the stocks with the highest dividend yields, which does not necessarily lead to a solid overall return. An example is the Deka DAXplus Maximum Dividend UCITS ETF, whose total return was zero percent over the last five years, while the DAX rose by 25%. Other globally oriented dividend ETFs were also unable to keep up with their benchmark indices. It is also important to pay attention to the costs of the ETF, which should ideally be well below 0.5%.

My favorite for 2024 is the SPDR S&P U.S. Dividend Aristocrats UCITS ETF (NASDAQ:DIFT) which has a different selection process. This ETF focuses on stocks from the US S&P Composite 1500 Index that have been increasing their dividends for at least 20 years. This selection strategy has led to good returns in the past, and I expect positive developments in 2024 as well. Despite the fall in the current year, the dividend stocks heavily weighted in the ETF deliver a dividend yield of 3.3% with moderate costs and a favorable P/E ratio of 16.

Overall, it shows that dividend ETFs are an interesting way for investors to generate consistent income. Nevertheless, it is advisable to pay careful attention to the ETF selection strategy and not just rely on the level of the dividend yield.