If you have a tax return, there are many ways to use it. However, investing in dividend ETFs may be one of your best options.Top dividend ETFs offer instant diversification over a wide range Dividend stockpays out passive income on a regular basis and can use these payments to build wealth over time.
Here are the top three high dividend ETFs you can consider buying on your tax return. All three have different approaches, but what they have in common is that they pay solid dividends, own a number of blue-chip companies, and have a solid track record.
and 11.75% Yield When it comes to Dividend ETFs, you can’t miss the JP Morgan Premium Income ETF due to its monthly payout schedule.
JEPI invests in blue-chip US dividend companies like Coca-Cola (New York Stock Exchange: KO), Pepsi (Nasdaq: PEP), AbbVie (New York Stock Exchange: ABBV), then invest up to 20% of your assets in equity-linked bonds or ELNs. According to JEPI’s summary prospectus, ELNs in which JEPI invests are “derivative instruments specifically designed to combine their economic characteristics.” S&P500 Index Call options are written in single note format and are not traded on exchanges. ”
This allows JEPI to capture most of the return of the S&P 500 while also executing a strategy that offers investors less exposure to volatility than an index and a monthly dividend payout. One potential downside of this strategy is that it will likely limit some of his JEPI’s potential upside in bull markets. So if you’re looking for growth or capital appreciation, this really isn’t the investment to make.
What is your target price for JEPI shares?
The lack of potential for capital appreciation can be seen in JEPI’s analyst forecasts. Analysts rate it as a moderate buy, JEPI Average Stock Price Forecast This implies a 12.1% upside potential. This isn’t bad, but it may not be worth writing down. However, if dividend income and total return are your goals, JEPI is a good starting point for your portfolio.
Investors can feel secure in JEPI’s portfolio of high-quality blue chip stocks.Below you will find JEPI top holdings Use the TipRanks holding screen. As you can see, in addition to the aforementioned consumer goods giants such as Coca-Cola and Pepsi, the Hershey Company (New York Stock Exchange: HSY), in addition to other well-known large-cap stocks like Microsoft (Nasdaq: MSFT), alphabet (Nasdaq: GOOGL),master Card (New York Stock Exchange: Massachusetts), and a visa (NYSE:V).
For the most part, these stocks boast strong smart scores — 7 of the top 10 stocks boast smart scores of 8 out of 10 or better. This corresponds to an Outperform rating.of smart score is TipRanks’ proprietary quantitative stock scoring system that evaluates stocks on eight different market factors. Results are data-driven and do not require any human intervention.
Moving on, JEPI’s expense ratio is reasonably reasonable at 0.35%, resulting in a loss of just 3.5% on a total revenue basis in 2022, mitigating last year’s volatility when the broader market suffered heavy losses. (which came after a strong total return of 21.5% in 2021).
JEPI’s strong track record to date, monthly payouts, huge dividend yield, and collection of blue chip stocks make this a great ETF to consider in a dividend portfolio, and I own it for exactly these reasons. It is one of the ETFs
SCHD takes a different approach than JEPI, but the Schwab US Dividend Equity ETF is another top dividend ETF for investors to consider this tax season.on the other hand Dividend Yield 3.6% Although is not as high as JEPI, SCHD has many advantages as it balances returns and potential capital appreciation.
SCHD is relatively well-diversified across 103 stocks, but its top 10 positions account for a larger proportion than JEPI’s top 10 stocks (17.4%), at 41.6%.Staring Top holding of SCHD, in fact, there are quite a few of the same names that are also found in JEPI funds, such as AbbVie, Pepsi, and Coca-Cola. On the other hand, the Cisco title (Nasdaq: CSCO), Texas Instruments (NASDAQ: TXN), and Broadcom (NASDAQ: AVGO) gives SCHD a bit more technical exposure than JEPI. Below are SCHD’s top 10 holdings, with Broadcom just outside (#11 on the list).
Another thing I really like about SCHD is its very small expense ratio of just 0.06%. That means that if an investor puts his $10,000 into the fund in his first year, he will only be paid $6 in management fees, and nothing beats such an investor-friendly approach.
SCHD also boasts an enviable long-term track record. Since its launch in 2011, his ETF has returned 13.8% annually on an annualized basis.
What is your target price for SCHD stock?
The analyst community has a hold rating for SCHD. SCHD average price target $81.27 implies a 10.4% upside potential. But given the ETF’s long-term outperformance and yield of 3.6%, it’s possible the ETF undervalues his SCHD at this point.
SCHD is one of the most popular ETFs, with just over $45 billion in assets under management. Given its strong track record, solid dividend yield, and lowest expense ratio, it’s easy to see why. So this could be another great option for dividend investors looking to take advantage of their tax returns.
Last but not least, the Vanguard International High Dividend Yield ETF is another great Dividend ETF for investors to consider. VYMI boasts a yield of 4.5%This is above not only the S&P 500 average yield (1.7%), but also the average 10-year Treasury yield (3.4%). VYMI’s fees are also relatively low, with an expense ratio of 0.22%.
Moreover, VYMI is very diverse. Not only does the company own 1,276 of his shares, but the top 10 positions only make up 14.4% of his assets.
These are all international stocks, but U.S. investors may be familiar with the top holding, Shell (NYSE: Shell) as well as Roche (OTC: RHHBY), Novartis (New York Stock Exchange: NVS),Toyota(New York Stock Exchange: TM).
Shell and Royal Bank of Canada (New York Stock Exchange: RY) HSBC (New York Stock Exchange: HSBC), BHP Group (New York Stock Exchange: BHP), and Unilever (New York Stock Exchange: UL) also has an “excellent” smart score of 8 or higher.
The advantage of VYMI is that it gives U.S. investors exposure to international markets and access to a portion of growth in a variety of markets outside of their home market. It also spreads the risk and makes it more diversified.
International markets have underperformed the U.S. in recent years, but could return to averages in the future, making it a good time to buy international stocks at bargain prices. Similarly, VYMI lags behind his US-focused SCHD returns mentioned earlier, but for example, the 7.6% annualized return since inception is still strong, and at some point in the future the situation will reverse. There is likely to be.
As shown below, TipRanks ETF Comparison Tool, things could change quicklyand VYMI has actually significantly outperformed SCHD over the past six months.
Use your tax returns wisely
In conclusion, use your tax returns wisely this year and consider investing to create long-term wealth. You can use these 3 ETFs to start or boost your own dividend portfolio. Future you will thank you because the dividend is a gift that keeps on giving.
None of these ETFs sound like a bad way to distribute your tax returns. You can also consider splitting it into 2 or 3 ETFs for even more variety.