It can be risky holding a high-yielding stock because there’s always that nagging concern that it may not last, and that the company will end up slashing its payouts. Through an exchange-traded fund (ETF), however, you can mitigate some of that risk since the fund holds a basket of stocks and isn’t reliant on just a single company.
And with the Global X SuperDividend U.S. ETF (NYSE Arca:DIV), you can get the best of both worlds with a high yield and plenty of diversification. The fund’s trailing 12-month yield is over 5.4%, which is more than four times the S&P 500 yield of just 1.3%. And with 50 holdings within the ETF, you can get some great diversification from this investment. It also isn’t weighted towards risky stocks, either.
One-quarter of the fund’s weight is in consumer staples, 15% is in utility stocks, 12% in industrials, and real estate at 11.5% is the only other sector that makes up more than 10%. The top holding in the fund is oil and gas company BP Midstream Partners LP (NYSE:BPMP) which pays a yield of 7.5%. It accounts for 2.8% of the fund’s total net assets. Another high-yielding stock in the fund is Iron Mountain (NYSE:IRM), an information management services business that pays its shareholders 5.7% per year. It accounts for 2.4% of the fund’s weight.
The ETF focuses on low volatility stocks with high yields, and it makes monthly distributions out to its investors. It also carries a modest expense ratio of 0.45%