5 Best ETF for Long term

Related Topics


Investing for passive income, ETFs are a great source of investment, and investing in the best ETFs for the long term would be the best choice.  ETFs generally pay dividends to the shareholders which is a great way to build a robust portfolio and create a source of passive income on the side.

best etf for long term

Dividend ETFs pay a portion of their profits back to shareholders in the form of a dividend, and over time, that money can add up substantially. However, not all dividend ETFs are created equal, and it’s important to look at the overall investment rather than the dividend payments alone. We’re here to give you the breakdown to buy the five best ETFs for the long term.

These five funds are strong options, and they can be a great addition to your portfolio.

Vanguard Russell 2000 Index Fund ETF Shares (VTWO)

Vanguard Russell 2000 (VTWO) is one of the largest investment management companies. As of February 28, 2021, Vanguard managed $7.3 trillion in global assets. VTWO trust owns total net assets of more than $5.93 billion.

Vanguard Russell 2000 offers exposure to smaller companies with the potential to grow significantly. That is quite important if you’re a long-term investor. As the name suggests, VTWO is benchmarked to the Russell 2000 index. VTWO excludes the top 1,000 American companies and then builds its portfolio with the next 2,000 stocks. That includes footwear company Crocs Inc., and small pharmaceutical company Biohaven Pharmaceutical – to name a few.

There’s no guarantee that an individual stock will succeed. But collectively VTWO has more small-sized stocks with significant upside potential than a fund with more stagnant holdings.

The company recently announced share splits for its three ETF funds including Russell 1000 Value, Russell 2000, and Russell 1000 Growth. VTWO will go through a two-for-one share split. The purpose of this share split is to keep share prices within efficient and accessible trading ranges.

This share split policy of VTWO has made it safe for investors and made it fall in the category of best ETFs for the long term. That benefits investors with ETF-centric portfolios by reducing uninvested cash in client accounts.

VTWO is good to go with as the ETF has a year-to-date daily return rate of 18.85%.

SPDR S&P 500 Dividend ETF (SDY)

SPDR S&P 500 Dividend ETF (SDY) tracks the S&P High Yield Dividend Aristocrats Index. SDY includes stocks from companies that have consistently increased their dividends every year for at least 20 consecutive years. SDY is currently offering its dividend at 2.35% per annum. While it pays its shareholders a quarterly dividend of roughly $0.50 to $0.60 per share.

With a track record of SDY’s stocks increasing dividends, your payments will likely increase over time.

South Jersey Industries is among SDY’s top holdings, along with Exxon Mobil Corp and AT&T Corp.

SDY fund has a long track record, as it was established in 2005. It contains 112 stocks from a variety of industries, providing ample diversification. Since its incorporation, the fund has earned an average rate of return of around 10% per year. Whereas, SDY has a current year-to-date daily total return of 22.01%.

With all its history and dividend offering and continuous growth, SDY is a promising best ETF for the long term.

iShares Core S&P Mid-Cap ETF (IJH)

If you’re unable to decide between mature companies and younger, riskier small caps, this iShares (IJH) fund represents the middle ground. IJH holdings are Goldilocks stocks that are neither too big nor too small. Some of them include regional financial firm Signature Bank and solar energy stock Solaredge Technologies.

IJH may not be among the fancy investment funds, but with over $63 billion in assets, IJH’s midsize strategy has a lot of appeal among investors.

IJH seeks to track the investment results of the S&P MidCap 400 composed of mid-capitalization U.S. equities. The fund generally will invest at least 80% of its assets in the component securities of its index. While 20% of its assets will include certain futures, options, swap contracts, cash, and cash equivalents.

The dividend yield on IJH is currently 1.07%, and its year-to-date daily total return is over 25%. At the moment, IJH is near its support zone. But if it further drops, you should keep an eye and buy around its major support zones, because in the end, it falls itself in the best ETFs for the long-term bracket.

iShares Core Dividend Growth ETF (DGRO)

iShares Core Dividend Growth ETF (DGRO) includes 389 stocks from a wide variety of industries, making it the most diversified fund on the list. Just like SDY, DGROprovides exposure to stocks that have a history of increasing their dividends over time. That makes it a solid ETF to create a source of passive income.

DGRO has an annual dividend yield of 2% and funds its shareholder’s quarterly dividends of around $0.20 per share. That might be quite low compared to many other ETFs. However, it’s also earned an average rate of return of around 13% per year since its inception in 2014. It means that if you can keep patience and wait then DGRO would be one of the best ETFs for the long term for you. Currently, it has a year-to-date daily return of more than 22%.

If you were investing $400 per month while earning a 13% average annual return, you’d have more than $1.4 million after 30 years. Now that’s a solid long-term investment. iShares Core Dividend Growth being a relatively smaller fund with over $20 billion net assets has much upside potential.

Vanguard FTSE Emerging Markets ETF (VWO)

Another ETF with a big following, Vanguard (VWO) emerging markets offering has nearly $117 billion in assets under management to rank as one of the largest ETFs on Wall Street. VWO holds more than 5,200 companies ranging from smaller stocks you can’t easily access via the typical U.S. brokerage account.

VWO seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in emerging market countries. The top nations in this fund include China, Taiwan, India, and Brazil.

VWO holds some of the prominent companies in the world. The fund has a 5.29% stake in Tencent Holdings, 4.73% in Alibaba, and 4.58% in Taiwan Semiconductor Manufacturing, among others.

VWO offers an annual dividend yield of 1.98%. If you want to look beyond the typical large stocks in developed markets, VWO is for you.

These were the five best ETFs for long term. ETFs generally include solid stocks that will likely increase their dividends consistently. Therefore, in such a volatile macroeconomic environment, ETFs are a smart option for your portfolio.

Leave a Comment

Your email address will not be published.

Latest Posts