7 Best High-Dividend ETFs

These are some of the highest-yielding ETFs available.

Inflation has been trending at 40-year highs, as January’s year-over-year reading came in at 7.5%, up from 7% in December. With numbers like these, few investors can beat inflation right now. Luckily, there are still pockets of the market where you can push back against those losses. Ben Johnson, director of global exchange-traded fund research at Morningstar, says dividend ETFs can “provide investors a means of generating regular income off equity investments without dipping into their capital.” Johnson says that when it comes to high-dividend ETFs, investors need to consider the downsides. “High yields may look compelling,” he says, “but it could be that the dividend is in danger.” Still, many investors are looking for opportunities to keep pace with or beat inflation, and one of the best ways to do that is income investing. Here are seven ETFs with 12-month yields of 5% or more.

Global X NASDAQ-100 Covered Call ETF (ticker: QYLD)

QYLD is a passively managed fund that attempts to match the returns of the Cboe Nasdaq-100 BuyWrite Index (BXN). This index uses an options contract strategy to hedge against losses in the Nasdaq-100 index and comes with an expense ratio of 0.6%, or $60 for every $10,000 invested annually. The fund has a four-star rating — out of 5 — from Morningstar based on past performance. In addition, QYLD has an overall total return rating from Lipper of four out of five, a return consistency rating of four out of five, a preservation rating of five out of five and an expense rating of five out of five. The only point at which it lacks on Lipper’s scale is in tax efficiency, which is only one out of five. With a 12-month yield of 11.5%, QYLD’s payouts are at the high end of dividend ETFs.

12-month yield: 11.5%

Global X MLP ETF (MLPA)

Another traditional hedge against inflation, MLPA is a passively managed fund tied to the benchmark Solactive MLP Infrastructure Index. This index comprises energy industry master limited partnerships that operate pipelines, storage facilities and other midstream assets. MLPA has a 12-month yield of 7.9%, which beat last year’s average inflation rate of 4.7%. The ETF has a two-star rating from Morningstar and carries a rating of two out of five on total return, consistency and tax efficiency from Lipper. Lipper also rates the ETF as a one out of five in its ability to preserve capital in different markets. However, the fund does maintain a five out of five rating from Lipper on expenses, as it has a 0.46% expense ratio.

12-month yield: 7.9%

Vanguard Global ex-U.S. Real Estate ETF (VNQI)

The highest-yielding ETF currently covered by Morningstar analysts, VNQI carries a Morningstar bronze rating. Tracking the benchmark S&P Global ex-U.S. Property Index, this passively managed fund holds real estate in more than 30 countries. Morningstar Associate Analyst Ryan Jackson says, “[e]xcluding U.S. securities effectively turns this fund’s category-relative performance into a referendum on U.S. real estate’s performance versus its foreign peers.” This strategy has led to a disappointing one-year total return of 2.3%. In fact, even with its bronze rating, VNQI has only two stars from Morningstar. With regard to dividend yields, VNQI’s strategy has paid off well. The fund has a 12-month yield of 6.7%. Plus, like many Vanguard funds, VNQI has a low expense ratio of only 0.12%.

12-month yield: 6.7%

WisdomTree Emerging Markets High Dividend ETF (DEM)

With a 12-month yield of 5.7% and an impressive one-year total return of 14.6%, DEM is another promising fund. However, this fund carries two stars and a neutral rating from Morningstar. With an expense ratio of 0.63%, DEM is a passively managed fund tracking the WisdomTree Emerging Markets High-Yielding Equity Index. This index is based on dividend-paying stocks from 17 different emerging markets, including Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia, Korea and Malaysia.

12-month yield: 5.7%

iShares Edge MSCI Multifactor International ETF (INTF)

With a Morningstar silver rating, INTF carries the highest Morningstar analyst rating on this list. The fund has a one-year total return of 4.4% and a 12-month yield of 5.6%. In fact, Morningstar Senior Analyst Daniel Sotiroff says that INTF “is a competitively priced fund with a well-constructed portfolio.” This passively managed fund calculates a score based on four different factors for each stock on the MSCI World ex USA Index, which is an index focused on large- and mid-cap stocks across 22 developed markets outside of the U.S. The score is based on each stock’s exposure to value, momentum, quality and size. The ETF then maximizes its exposure to stocks with the highest overall scores. INTF has a relatively low expense ratio of 0.3%.

12-month yield: 5.6%

VanEck Vectors J.P. Morgan EM Local Currency Bond ETF (EMLC)

EMLC is a passively managed bond ETF tracking the JPMorgan GBI-EM Global Core Index. This index comprises emerging market government bonds. And this strategy brings a hefty dividend with it. Although EMLC has a disappointing -6.5% one-year total return, the fund has a 12-month yield of 5.2%. Looking at past performance, EMLC has a three-star rating from Morningstar, which analyst Neal Kosciulek says is because “[t]he fund has struggled to closely track its benchmark, which has hampered performance.” But the yield provides guaranteed income, and investors looking to diversify away from U.S. investments and equities can find some value in this strategy. EMLC has an expense ratio of 0.3%.

12-month yield: 5.2%

iShares Broad USD High Yield Corporate Bond ETF (USHY)

USHY is a passively managed fund tracking the benchmark ICE BofA Merrill Lynch U.S. High Yield Constrained Index. This index tracks the performance of corporate junk bonds in the U.S. Kosciulek calls USHY “a decent pick for passive exposure to the high-yield bond market.” Looking at past performance, this strategy has paid off well for the fund. USHY has a past performance rating of four stars from Morningstar. Although it only has a one-year total return of -0.9%, it has a 12-month yield of 5.2%. The fund also carries an attractive expense ratio of only 0.15%.

12-month yield: 5.2%

7 best high-dividend ETFs:

— Global X NASDAQ-100 Covered Call ETF (QYLD)

— Global X MLP ETF (MLPA)

— Vanguard Global ex-U.S. Real Estate ETF (VNQI)

— WisdomTree Emerging Markets High Dividend ETF (DEM)

— iShares Edge MSCI Multifactor International ETF (INTF)

— VanEck Vectors J.P. Morgan EM Local Currency Bond ETF (EMLC)

— iShares Broad USD High Yield Corporate Bond ETF (USHY)

More from U.S. News

9 Best Pharmaceutical Stocks to Buy for Income

Tesla Competitors: 7 Rival Electric Vehicle Stocks to Buy