Busy Schedule Busy Life
We are always very busy with work, life, hobbies, families, friends etc and many other things. With so much going on, it can be difficult to prioritize and find the time to invest in one’s financial future. Despite the importance of saving and investing, many individuals put it off, thinking they will have more time and resources later on. Hence, one of the good way is to take a more passive approach for many busy people.
Before i go on to talk about investing, I would like to reiterate that one should never forget to live a real fulfilling life. Live in present, don’t regret past or keep worrying about the future.
I only Truly understand Living in the Moment now after the passing of my mum.
I made the mistake last time and hope no one will do the same like me. Please live a fulfilling life – the final objective with Time as the most precious asset. Tools such as money, investing, planning etc are just the tools to reach your final target goal – LIFE.
What is passive investing?
Passive investing is an investment strategy in which a portfolio is constructed to mirror the performance of a market index, such as the S&P 500 or world index, rather than actively seeking to outperform it by buying individual stocks. This is achieved through low-cost index funds or ETFs, with the goal of matching market returns at a lower cost than active management.
Passive Dividend ETF investing
Passive dividend ETF investing involves investing in exchange-traded funds (ETFs) that hold a diversified portfolio of dividend-paying stocks. The ETFs aim to track the performance of a benchmark index that measures the performance of high dividend yielding stocks. This approach provides passive investors with exposure to a diversified portfolio of dividend-paying stocks with the goal of generating a steady stream of income.
In Singapore contexts, people like to buy Singapore Reits/Stocks because there is no withholding taxes. Some buy Hong Kong Stocks which most has no withholding taxes. Of course, there is an options to buy US dividend counters but usually these are less ideal due to withholding taxes.
Despite this fact, if one still want to buy US dividend counters with a more passive approach. I would recommend these 5 counters with low expense ratio.
Expense Ratio is important
Expense ratios are important to passive investors because they directly affect the net return on their investment. A high expense ratio means a higher portion of the investment is being taken as fees, reducing the overall returns. Low expense ratio funds allow passive investors to keep more of their returns, potentially leading to higher returns over time.
Schwab International Dividend Equity ETF – SCHY
The fund’s goal is to track as closely as possible, before fees and expenses, the total return of an index composed of high dividend yielding stocks issued by companies outside the United States.
Some other key facts about this fund:
- Invests in non-U.S. high dividend yielding stocks with a record of paying dividends for at least 10 consecutive years, financial strength and screened for lower volatility
- Expense Ratio: 0.140%
- Total Number of Holdings: 147
- Weighted Average Market Capitalization: 63B
- Yield: 3.67%
- Highly diversified outside United States
- Return since inception 04/29/2021: -3.24% (This fund is still quite new given that it started in the year where world markets are coming down.)
Schwab U.S. Dividend Equity ETF – SCHD
For those who like US dividend stock, this ETF is for you.
The fund’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Dividend 100™ Index.
Some other key facts about this fund:
- Tracks an index focused on the quality and sustainability of dividends
- Expense Ratio: 0.060%
- Total Number of Holdings: 104
- Weighted Average Market Capitalization: 127B
- Yield: 3.39%
- Highly diversified within United States
- Return since inception 10/20/2011: 13.82%
- Look at the top 10 holdings, are you familiar with them?
iShares Core Dividend Growth ETF – DGRO
This is an ETF by iShares that would give you both growth and yield at the same time.
Some other key facts about this fund:
- The iShares Core Dividend Growth ETF seeks to track the investment results of an index composed of U.S. equities with a history of consistently growing dividends.
- DGRO offers low-cost exposure to U.S. stocks focused on dividend growth
- Access companies that have a history of sustained dividend growth and that are broadly diversified across industries
- Expense Ratio: 0.08%
- Total Number of Holdings: 448
- Weighted Average Market Capitalization: 24B
- Yield: 2.34%
- Return since inception 06/10/2014: 11.02%
- Look at the top 10 holdings, are you familiar with them?
Vanguard Dividend Appreciation ETF – VIG
This is one of the major passive dividend fund by our passive fund manager Vanguard.
Some other key facts about this fund:
- Seeks to track the performance of the S&P U.S. Dividend Growers Index.
- Passively managed, full-replication approach.
- Fund remains fully invested.
- Large-cap equity, emphasizing stocks with a record of growing their dividends year over year.
- Low expenses minimize net tracking error.
- Expense Ratio: 0.06%
- Total Number of Holdings: 289
- Weighted Average Market Capitalization: 150B
- Yield: 1.92%
- Return since inception 04/21/2006: 9.08%
- Look at the top 10 holdings, are you familiar with them?
S&P 500 Dividend Aristocrats ETF – NOBL
This is the only ETF focusing exclusively on the S&P 500 Dividend Aristocrats – very famous fund that many know of.
Some other key facts about this fund:
- The only ETF focusing exclusively on the S&P 500 Dividend Aristocrats—high-quality companies that have not just paid dividends but grown them for at least 25 consecutive years, with most doing so for 40 years or more.
- Often household names, NOBL’s holdings generally have had stable earnings, solid fundamentals, and strong histories of profit and growth.
- Expense Ratio: 0.35%
- Total Number of Holdings: 64
- Weighted Average Market Capitalization: 91B
- Yield: 2.68%
- Return since inception 10/09/2013: 11.44%
- Very diversified across sectors
Which ETFs/Funds should I buy?
If I am an investor who want passive dividend investing and interested more in United States with some exposure to international dividend counters, I would buy all these 5 counters using DCA approach. However, do note that for investors in certain country, there will be withholding taxes which are not ideal as it will eat into your returns.
Nevertheless these are solid passive funds that one can consider to put into its list of portfolio.
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