Here's How Much You'd Need to Invest in HDV to Generate $500 per Month in Dividends
By selecting high-quality stocks with above-average yields, the iShares Core High Dividend ETF generates sustainable income.
By David Dierking
There are plenty of dividend exchange-traded funds (ETFs) today offering yields of 3%-4%. Relatively few of those layer a quality screen into their fund's selection process to ensure the yield is durable and sustainable.
The iShares Core High Dividend ETF (HDV +1.22%) is one of them. It targets high-yielding stocks from a universe that passes a pair of Morningstar quality screens. By doing this, it mitigates some of the volatility risk that comes from pure yield-based strategies and stabilizes the income stream. Top holdings include ExxonMobil, Verizon Communications, and AbbVie.
The iShares Core High Dividend ETF has a current yield of 3%.
Five hundred dollars per month in dividend income translates to $6,000 annually. That kind of income at a 3% annual dividend yield would require an investment of $200,000, assuming that the yield remains steady.
Of course, dividend yields from ETFs can fluctuate over time as the portfolio's underlying holdings change. The iShares Core High Dividend ETF, however, should have a fairly steady yield since its income stream is backed by a portfolio of high-quality, established companies with competitive advantages and strong balance sheets.
Equity income investors should find this fund to be a solid balance between portfolio quality and above-average income.