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Max Manturov

Max Manturov

Head of investment research regulated by CySec 22.04.2021

A Conservative Portfolio: How to Get Regular Income with Dividend Stocks

Those who prefer stable earnings with low risk are referred to as conservative investors. Dividend stocks of large companies may prove to be a good option for them, as such assets tend to perform better than the market in general when it comes to correction. Buying dividend stock ETF's may become a great solution for a highly diversified portfolio. Our analysts picked three very well structured ETFs that would help you minimize your portfolio risks.

1. SPDR S&P Dividend ETF

Current Price: $120

Ticker: SDY.US

SPDR S&P Dividend ETF is a great option for those who are looking for a steadily increasing passive income. The fund is based upon the S&P High Yield Dividend Aristocrats Index and picks only the most high-yield the equities. A requirement that must always be complied with is that the company should increase its dividend payout every year over at least the last 25 years. With this approach, SDY invests only in such companies that will most likely continue paying dividends going forward, which makes it a good option for conservative investors and helps tackle the inflation.

Key Facts:

Assets under management: $19.12B

Dividend yield: 2.60%

Expense Ratio: 0.35%

Number of stocks in ETF: 113

Companies with the largest share:

  • Exxon Mobil Corporation: 3.38%
  • AT&T, Inc.: 2.53%
  • People’s United Financial, Inc.: 2.37%
  • Chevron Corporation: 2.30%
  • Federal Realty Investment Trust: 2.02%

Countries with the largest share: US, 95.40%

Sectors with the largest share: Finance, 24%

Average P/E ratio: 18.40х

YTD yield: 15.10%

Please make sure to read SPDR S&P Dividend ETF's Key Information Document (KID) before making any transaction.

2. Vanguard High Dividend Yield ETF

Current Price: $102.50

Ticker: VYM.US

Vanguard ETF tracks the FTSE High Dividend Yield Index and includes the stocks of large cap companies with dividend payouts. These are mostly value companies that have low market price, but high turnover and profit. Out of such companies, only the most high-yield ones are picked. Most of such companies have low risk, as they work in stable sectors and have a good cash flow.

Key Facts:

Assets under management: $36.70B

Dividend yield: 2.92%

Expense Ratio: 0.06%

Number of stocks in ETF: 417

Companies with the largest share:

  • JPMorgan Chase & Co: 3,61%
  • Johnson & Johnson: 3.40%
  • Procter & Gamble Company: 2.59%
  • Home Depot, Inc.: 2.57%
  • Bank of America, Corp.: 2.34%.

Countries with the largest share: US, 96.2%

Sectors with the largest share: Finance, 21.9%

Average P/E ratio: 19.60х

YTD yield: 12.70%

Please view Vanguard High Dividend Yield ETF's Key Information Document (KID) before making an investment.

3. Schwab US Dividend Equity ETF

Current Price: $74.40

Ticker: SCHD.US

Schwab ETF tracks Dow Jones U.S. Dividend 100 Index, which has high yield companies that have been paying dividends for at least 10 years. 100 stocks are selected based on their financial sustainability using a special scoring system.

There are some diversification rules, too, such as:

  • Any stock may not have more than 5% of the index
  • Any particular sector may not exceed 25%

There are some other figures, too, such as dividend payout increase and dividend yield. This offers one an opportunity to get more dividend payout than elsewhere in the market.

Key Facts:

Assets under management: $22.45B

Dividend yield: 2.79%

Expense Ratio: 0.06%

Number of stocks in ETF: 102

Companies with the largest share:

  • Home Depot, Inc.: 4.60%
  • Texas Instruments Incorporated: 4.23%
  • Amgen, Inc.: 4.15%
  • Pfizer, Inc.: 4.12%
  • Broadcom, Inc.: 4.09%

Countries with the largest share: US, 99.10%

Sectors with the largest share: Finance, 21.40%

Average P/E ratio: 17.70х

YTD yield: 16.80%

You can view more information on Schwab US Dividend Equity ETF in its Key Information Document (KID); make sure to check it out!

How to Buy ETFs?

If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.

After opening an account, you can buy ETFs in either of the following ways:

Freedom24 Web Platform: In the Web Terminal section, type SCHD.US (Schwab US Dividend Equity ETF ticker), VYM.US (Vanguard High Dividend Yield ETF ticker), and SDY.US (SPDR S&P Dividend ETF ticker) in the search box, and select the appropriate ETF in the results. Open a secure session in the trading window on the right, select the number of securities you want to buy, and click Buy.

Freedom24 iPhone or Android App: Go to the Price screen and tab the search icon in the top right corner. In the search dialog that will show up, type SCHD.US (Schwab US Dividend Equity ETF ticker), VYM.US (Vanguard High Dividend Yield ETF ticker), and SDY.US (SPDR S&P Dividend ETF ticker), and select the appropriate ETF in the results. You will then see the ETF in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of securities you want to buy and click Buy.

Go to Freedom24 web platform >>

*Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Cyprus Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.

  • Sources of information

  • Recommendation evaluation methodology in accordance with Terms and Conditions of Market Research Use
    Freedom Finance analysts perform a three-stage analysis. They select a promising industry based on the latest news, statistics and industry-specific metrics. They assess the supply and demand situation and its future development dynamics. Industry’s investment attractiveness is mostly affected by the forecasted market growth rates; total addressable market, player concentration level and likeliness of a monopoly formation, as well as the level of regulation by various entities or associations.

    The assessment is followed by the comparative analysis based on the selected sample. The sample comprises companies with a market capitalization of over USD 1 billion, but there is space for exceptions (when the suitable level of liquidity for company’s securities is available on the stock exchange). The selected companies (peers) are being compared against each other based on multipliers (EV/S, EV/EBITDA, PE, P/FCF, P/B), revenue growth rates, marginality and profitability (operating income margin, net income margin, ROE, ROA), and business performance.

    Having completed the comparative analysis, the analysts carry out a more in-depth research of the news about the selected company. They review company’s development policy, information about its current and potential mergers and acquisitions (M&A activity), and assess the efficiency of company's inorganic growth and other news about it over the past year. The main objective at this stage is to identify the growth drivers and evaluate their stability, as well as the extent of impact they have on the business.

    Based on all the data collected, the analysts determine the weighted forecasted figures of company’s growth rates and proposed business marginality, which are used to calculate the company’s multiplier-based estimated value. The said value enables setting the stock price target and stock value growth potential.

    The expected timing of the idea implementation is set depending on the current market situation, volatility level and available forecasting horizon for industry and company development. The forecasting period is normally set between 3 and 12 months.