3 High Dividend ETFs to Buy with $25,000 and Hold Forever

It has never been easier to invest in Exchange Traded Funds (ETFs). That said, because there are so many ETFs to choose from, it can make some investors’ heads spin.

So let’s take a look at three high-dividend-paying ETFs that income-seeking investors might want to consider.

Energy Select Sector SPDR fund

It’s at the top of my list the Energy Select Sector SPDR fund (NYSEMKT:XLE). This ETF is a great choice for income-seeking investors for several reasons.

First and foremost, it focuses on a sector packed with valuable stocks with high dividends: the energy sector. The assets of the fund are almost completely included from US companies in the energy sector, such as drilling companies, pipeline operators, refineries, etc.

Top positions include ExxonMobil, ChevronAnd EOG Sources.

Second, with an expense ratio of 0.09%, investors give up very little on costs. For example, an investment of €10,000 yields only €9 per year in costs. This means that investors keep a greater share of the returns generated by this fund. Furthermore, with a current dividend yield of 3.1%, the fund scores better than many of its ETF peers.

Moreover, this ETF has a history dating back to the last century. OOver its more than 25-year history, the fund has generated a compound annual growth rate (CAGR) of 8.4%. An initial investment of $25,000 in 1998 would be worth $191,000 today.

In short, this ETF combines solid returns and dividends with low fees while focusing on some of the most affordable stocks on Wall Street. What’s not to like for income-oriented investors?

JPMorgan Equity Premium Income Fund

The following is a fund with a unique value proposition. Instead of just owning dividend-paying stocks, the company owns all types of stocks. Yet it generates a hefty dividend yield of 7.3%.

How does the JPMorgan Equity Premium Income Fund (NYSEMKT: JEPI) do that? This happens through the power of stock options. Specifically, the fund uses a covered call strategy in which the fund managers sell out-of-the-money call options against the fund’s core shares.

As a result, the fund generates cash from the sale of the stock options is then passed on to investors as dividend payments.

In this way, the fund can generate income from stocks that pay little or no dividends. For example, one of the fund’s top holdings is Amazona share that never paid a dividend.

The fund started in 2020 and is still relatively new. However, with a CAGR of 12.9%, the first results were positive. An initial investment of €25,000 would have grown to €40,000 today.

The story continues

In terms of costs, the fund charges an expense ratio of 0.35% to be expected given the way the fund works. Nevertheless, that’s only $35 per year for every $10,000 invested.

So for income-seeking investors looking to diversify away from traditional value stocksthen this ETF is something to consider.

Forefront High Dividend Yield Table of contents ETF

Finally, there is the Forefront High Dividend Yield Table of contents ETF (NYSEMKT: VYM). This index fund focuses on large-cap stocks that offer stability and high dividend yields. With more than 400 positions, the fund offers investors a solid range of equities.

The holding companies come from numerous sectors, including consumer durables, energy and industry. The most important holdings can be found below:

Founded in 2006, the fund has a total lifetime CAGR return of 8.4%, meaning an initial investment of €25,000 would have grown to €102,000 today.

The fund’s 0.06% expense ratio is among the best around; investors pay just $6 per year for every $10,000 invested.

In terms of income, the fund boasts a current dividend yield of 2.9%. That may not seem like much for an income-producing ETF, but remember that the selling point of this fund is the quality of its investments. Rather than attacking laggards with high dividend yields, this fund is higher up the stock food chain. It owns well-managed companies that are likely to deliver solid long-term results – not just big dividends.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Jake Lerch holds positions at Amazon and EOG Resources. The Motley Fool holds positions in and recommends Amazon, Chevron, EOG Resources, Home Depot, JPMorgan Chase, Meta Platforms, Microsoft, Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF, and Walmart. The Motley Fool recommends Broadcom, Johnson & Johnson, and Progressive and recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.

3 High Dividend ETFs to Buy with $25,000 and Hold Forever was originally published by The Motley Fool