Dividend stocks come in all shapes and sizes. People want to add a good dividend stock to their portfolio for extra income. Why is it so hard to pick the right one?
Through lots of research, finding the right sets of dividend stocks can be time-consuming. A good dividend ETF like SCHD or VYM can provide a simple, low-cost option for dividends.
Dividends are the excess profits a company has accumulated over the last year. They have a choice. They can either reinvest their profits into the company or give the shareholders a piece in the form of a dividend.
Many growth companies will prefer to reinvest in their company. These companies are Tesla, Amazon, and Google. Companies like Apple and Microsoft have smaller dividends, but they, too, reinvest into the growth.
SCHD is the Schwab U.S. Dividend Equity ETF tracks the Dow Jones Dividend 100 Index. The goal of the ETF is to follow as close to the index as possible, giving it a low-cost option focused on the quality and sustainability of dividends.
VYM is the Vanguard High Dividend Yield ETF. It tracks the FTSE High Dividend Yield Index with a focus on those companies that have an above-average dividend yield.