By Exchange-traded funds (ETFs) can provide you with simple, low-cost ways to invest in the stock market. Some of the best funds make it easy to quickly gain exposure to an array of promising investments, such as dividend stocks and fast-growing small businesses. Here are two ETFs that look particularly well-positioned to deliver lucrative gains to their shareowners.
This dividend-paying ETF can help you boost your passive income
When you’re rewarded with a steady stream of cash payments from your portfolio, the benefits of investing are made clear. You could use your dividend income to pay your bills, reduce debt, or invest in other wealth-building opportunities.
Better still, dividend-paying stocks tend to hold up relatively well during market declines. They’re also typically less volatile than stocks that do not pay dividends. Moreover, stocks that consistently raise their cash payouts can help you generate bountiful streams of passive income that grow steadily over time.
If these aspects of dividend investing sound appealing, consider the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). This low-cost fund tracks an index comprised of financially sound businesses with proven histories of sustaining their dividend payments to shareholders. This intelligent strategy has helped Schwab’s ETF more than triple its investors’ money over the past decade.
As its name implies, Vanguard’s ETF holds stakes in roughly 2,000 stocks. With a median market value of $3 billion, these small-cap and mid-cap companies tend to have plenty of room for further growth. Vanguard’s fund thus pairs well with the Schwab U.S. Dividend Equity ETF, which holds mostly large-cap stocks. Owning both ETFs could provide you with a solid combination of proven performers and hard-charging upstarts.
Moreover, many of the stocks held by the Vanguard Russell 2000 ETF stand to benefit from economic stimulus measures. The Federal Reserve recently cut interest rates for the first time since early 2020, and the central bank is expected to implement more rate cuts in the coming months. Declining interest rates tend to have an outsized impact on smaller businesses that depend heavily on loans to fund their expansion. Lower financing costs, in turn, could spark a powerful rally in small-cap stocks.
The Vanguard Russell 2000 ETF, with its low annual expense ratio of 0.1%, is a smart, low-cost way to profit from a potential small-cap boom.
Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron and Home Depot. The Motley Fool recommends Lockheed Martin and Verizon Communications. The Motley Fool has a disclosure policy.
Want to Get Richer? 2 Top ETFs to Buy Now was originally published by The Motley Fool
