Grow your passive income with these high-yielding dividend ETFs and alternative investment options

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For income-focused investors, high-yield dividend exchange-traded funds (ETFs) are a reliable way to generate steady cash flow while benefiting from a diversified portfolio of dividend-paying companies. These funds often offer lower volatility than individual stocks, making them an attractive option for new and experienced investors. They can also provide a faster path to diversification because they often contain hundreds of stocks, bonds and other types of securities.

Not all high yield ETFs are created equal. As an investor, you want to factor in a few crucial factors: fees, holdings, and records. Some ETFs can be riskier, but offer rewards in the form of higher returns. ETFs aren’t the only way to earn high returns. There are other high-yielding alternative investment options outside of the traditional markets to consider.

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Trust Option 1: Schwab US Dividend Equity ETF

The Schwab US Dividend Equity ETF (NYSE:SCHD) focuses on high-dividend-yielding US stocks with an emphasis on quality and durability. It tracks the returns of the Dow Jones US Dividend 100™ index, with 90% of its net assets invested in these stocks. With a trailing 12-month yield of 3.43% and a 10-year annualized yield of 10.84%, SCHD can be a solid choice for investors looking for income and growth potential. This ETF’s core holdings include major companies such as Lockheed Martin (NYSE:LMT), AbbVie (NYSE:ABBV), and Home Depot (NYSE:HD), offering a balanced mix of stability and profitability.

Trust Option 2: Vanguard High Dividend Yield ETF

The Vanguard High Dividend Yield ETF (NYSE:VYM) uses the FTSE High Dividend Yield Index as a benchmark and focuses on stocks that are expected to have above-average dividend yields. It follows a passively managed, full replication approach. With a trailing 12-month yield of 2.87% and a 10-year annualized total return of 10.07%, VYM has consistently provided investors with both reliable income and capital appreciation. Top stocks include Broadcom (NASDAQ:AVGO), JPMorgan Chase & Co. (NYSE:JPM) and Exxon Mobil (NYSE:XOM), making VYM a solid choice for conservative investors.

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Trust Option 3: iShares Select Dividend ETF

The iShares Select Dividend ETF ( NASDAQ:DVY ) is another reliable option for income seekers. Its benchmark is the Dow Jones US Select Dividend Index. The ETF had a trailing 12-month return of 3.52% and a 10-year annualized return of 9.61%. DVY’s portfolio includes high yield stocks such as Altria Group Inc. (NYSE:MO), Phillip Morris International (NYSE:PM), and AT&T (NYSE:T), offering a reliable mix of income and potential capital appreciation.

Risky option with ultra high return: ETF Global X SuperDividend

For investors with a higher risk tolerance, the Global X SuperDividend ETF (NYSE:SDIV) offers a compelling, albeit risky, opportunity. SDIV targets the highest yielding dividend stocks globally, with a trailing 12-month return of 10.72%. However, the ETF’s 10-year total return of -3.60% reflects the significant risks involved. SDIV’s portfolio is comprised of companies such as Lufax Holding (NYSE:LU), Yue Yuen Industrial and Astra International. Although 35% of its current holdings are in the US, this ETF has strong exposure to Hong Kong, the UK and Australia.

Moving beyond ETFs

While high-yield dividend ETFs can be a way to generate passive income, investors may also want to explore alternative options for potentially higher returns. Two such options are Yieldstreet and Groundfloor.

Yieldstreet

Yieldstreet provides access to a diverse range of asset classes, including real estate, art and legal finance, allowing accredited investors to diversify beyond traditional stocks and bonds. Platform investments typically offer returns between 7% and 12%, depending on risk profile and duration. Yieldstreet allows individuals to invest in professionally managed alternative assets previously reserved for institutional investors.

Ground floor

Groundfloor is a real estate crowdfunding platform focused on short-term, high-yield real estate debt investments. Aiming to offer returns between 8% and 15%, Groundfloor allows investors to finance real estate projects in the US with a minimum investment of just $10. The platform’s unique approach can enable investors to earn high returns by participating in the financing of residential real estate projects, often with shorter holding periods compared to traditional real estate investments.

High yield dividend ETFs can be a powerful tool for building a reliable passive income stream. While the three trust ETFs highlighted above offer a balanced mix of income and stability, the Global X SuperDividend ETF presents a riskier, potentially higher-yielding option for those looking to maximize their income potential . Additionally, alternative platforms such as Yieldstreet and Groundfloor offer exciting opportunities for investors looking to explore beyond traditional dividend-paying assets. As always, it is essential to consider your risk tolerance and investment objectives when selecting the best options for your portfolio.

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This article Grow Your Passive Income With These High-Yield Dividend ETFs and Alternative Investment Options originally appeared on Benzinga.com