Updated on November 24, 2024
This page describes 3 different types of Exchange Traded Funds or ETFs:
Growth ETFs
Dividend Growth ETFs
Dividend Income ETFs.
A Growth ETF contains stocks that are expected to grow in value over time. You will not get a very high dividend, and you will not get any dividend growth, but the share price should appreciate by a large amount over time.
A Dividend Growth ETF contains stocks that have a history of increasing their dividends by a large amount over time. You will only get an average dividend yield to start with, but over time your yield on cost will keep going up as they raise the dividend.
A Dividend Income ETF will pay you high dividend income on a monthly basis. You will not get a lot of share price appreciation or dividend growth, but you will get a high starting dividend yield along with preservation of capital.
Growth ETFs:
QQQ is the Invesco QQQ Trust ETF. It has grown by 160% in the past 5 years and by 395% in the last 10 years. It has been around since 2000 and it has an expense ratio of 0.20%.
QQQM is the Invesco NASDAQ 100 ETF. It has only been around since 2020, but it should have performance similar to QQQ. They are both based on the NASDAQ 100 index, but QQQM has a lower expense ratio of only 0.15% compared with 0.20% for QQQ.
SCHG is the Charles Schwab U.S. Large-Cap Growth ETF. It has grown by 145% in the past 5 years and by 322% in the last 10 years. It has been around since 2010 and it has an expense ratio of 0.04%.
VUG is the Vanguard Growth Index Fund. It has grown by 131% in the past 5 years and by 284% in the last 10 years. It has been around since 2003 and it has an expense ratio of 0.04%.
VOO is the Vanguard S&P 500 ETF. It has grown by 93% in the past 5 years and by 191% in the last 10 years. It has been around since 2010 and it has an expense ratio of 0.03%.
Dividend Growth ETFs:
SCHD is the Charles Schwab U.S. Dividend Equity ETF. It is based on the Dow Jones Dividend 100 index. These are the top 100 dividend paying stocks according to Dow Jones. It has a starting dividend yield of approximately 3.5% with an average 12% dividend growth rate per year. It is considered by many investors to be the best Dividend Growth ETF available.
With a current share price of $29.35, SCHD has a dividend yield of only 3.46%. However, if you hold on for the long term, your dividend yield will keep increasing over time. Here is an example of how this works:
If you had bought SCHD in November of 2019, you would have paid $19.03 per share. With a current dividend of $1.52 per share, you would be earning an 8% dividend yield on your original investment.
If you had bought SCHD in November of 2014, you would have paid $13.50 per share. With a current dividend of $1.52 per share, you would be earning an 11.25% dividend yield on your original investment.
If you had bought SCHD in October of 2011, you would have paid $8.67 per share. With a current dividend of $1.52 per share, you would be earning a 17.5% dividend yield on your original investment. The longer you hold on to it, the higher your yield becomes on your original investment.
Here is a link that shows all 100 stocks that are currently in the index:
Charles Schwab U.S. Dividend Equity ETF
Dividend Income ETFs:
SPYI is the Neos S&P 500 High Income ETF. It has a current dividend yield of 11.7%, but it does not have a very long dividend history because it has only been around since 2021. Its share price is up by 5% during that time frame. You will not get a lot of share price appreciation or a lot of dividend growth, but you will get a high starting dividend yield.
JEPQ is the J P Morgan Nasdaq Equity Premium Income ETF. It has a current dividend yield of 9.28% and it has been around since 2021. Its share price is up by 11% in that time frame.
JEPI is the J P Morgan Equity Premium Income ETF. It has a current dividend yield of 7.06% and it has been around since 2019. Its share price is up by 18.6% in that time frame.