Morningstar says these dividend ETFs are among the best.
Exchange-traded funds are one of the easiest ways to diversify your retirement portfolio. ETFs are a great source of passive, diversified exposure to a particular market index, sector or theme. Dividend ETFs can also be a great way to earn low-risk income, especially with interest rates near all-time lows. With thousands of ETFs to choose from, investors should seek out funds that have low fees, plenty of liquidity and a reasonable valuation. Here are eight ETFs with at least a 2% distribution yield, at least 500,000 in daily average trading volume and a five-star rating from Morningstar analysts.
Energy Select Sector SPDR Fund (ticker: XLE)
After years of underperformance, the energy sector has come to life so far in 2021 on hopes of booming global economic reopening demand and rising commodity prices. The XLE fund is already up 38% year to date in 2021, more than triple the return of the overall S&P 500. The XLE is one of State Street Global Advisors' most popular S&P 500 sector ETFs, providing exposure to some of the world's largest energy companies, including many oil and gas stocks. The XLE's top holdings include Exxon Mobil Corp. (XOM), Chevron Corp. (CVX) and EOG Resources (EOG). The fund also pays a 4.5% dividend.