A great way to set your portfolio up for some gains over the long term is by investing in a broad mix of dividend stocks. The recurring income you'll receive from those payouts will help increase the value of your portfolio. And normally, companies that are paying dividends are profitable and generating some decent cash flow.
And rather than investing into dozens of stocks all by yourself, you can just invest in a single exchange-traded fund (ETF) and get even more diversification. The Vanguard High Dividend Yield ETF (NYSE Arca:VYM) is an example of an ETF that could make for a promising investment.
At around 3%, it pays a yield that's higher than the S&P 500 average. And year to date, the fund has outperformed the broader index; its total returns are a negative 7% but that's still better than the S&P's 17.5% decline. The fund only has a net expense ratio of 0.06%, which makes it incredibly cheap, allowing investors to keep the vast majority of their gains.
There are 443 stocks in the fund, making it well-diversified. And with the fund averaging a price-to-earnings multiple of 15.4, there are some good value buys here. The top stocks in the ETF include Johnson & Johnson (NYSE:JNJ), Exxon Mobil (NYSE:XOM), and JPMorgan Chase (NYSE:JPM). And although they're among the top holdings, they individually make up no more than 3% of the fund's weight.
Invest in this fund if you're looking for a safe option to generate recurring income from stocks while also achieving some great diversification.
