An equity exchange traded fund (equity ETF) that holds stocks in companies that have a history of paying and distributing dividends to stockholders. However, dividends, by nature, are not guaranteed as opposed to coupons paid out on bonds and other debt securities.
Dividend ETFs are designed to provide a stream of income and long-term growth. The high yield potential can be attained from companies that have the high levels of current yield but may have unsustainable dividend payment over time. Dividend growth can be produced by companies that have a history of growing dividends over time but may have a lower current yield.
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