Looking for a portfolio that generates you a monthly income? With the following ETFs (Exchange Traded Funds), you can build a core portfolio that gives you a monthly income while have a diversified portfolio. Many investors prefer income or dividend investing for the monthly income, while other like the idea of compounding interest.
The list of ETFs below gives you some of the best global dividend paying stocks, US Treasuries, and preferred stocks. When creating this small portfolio, I wanted to have a few ETFs to help keep commissions low while producing a monthly income. Preventing overlapping as much as possible was second on my list. Many people buy ETFs without looking at the holdings failing to realize that one stock is a top 10 holdings in each of the ETFs, thus, killing the rule of diversification.
The Core ETFs For An Income Investor’s Portfolio
- SPDR S&P 500 Dividend (SDY) – S&P 500 dividend achievers is composed of the best dividend paying stocks in the S&P 500. Currently yields 5.45%.
- PowerShares International Dividend Achievers (PID) – Staying diversified, this ETF has some of the best global dividend paying stocks. Currently yields 6.82%.
- Vanguard Total Market Bond ETF (BND) – Top 10 holding are US Treasury Bonds. This bond fund aims at bonds maturing in 3-5 years (intermediate term). Currently yields 4.5%.
- iShares S&P 500 Preferred Stock Index (PFF) – This ETF is composed of nothing but preferred stocks from the S&P 500. Currently yields 9.49%.
Starting off you might want to allocate 25% to each of the ETFs listed above. As you build this portfolio up, you might want to cut back you allocations to 15% to 20% giving you 20%-40% to buy individual stocks or trade short term trends to build cash.
If you have a large amount to start the portfolio you might also look into some Real Estate ETFs, such as Vanguard REIT Index ETF (VNQ) which currently yields 8.22%.
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