Investing in dividend-paying stocks can be a great way to generate passive income and build long-term wealth. However, finding the right stocks to invest in can be challenging. That's where dividend ETFs come in, these are specifically handy for those adopting a dividend (growth) strategy. If I personally could choose only one ETF for this strategy as of now it would be the Fidelity Global Quality Income ETF (FGQI).
Here are some reasons why FGQI is a decent ETF to invest in as a dividend investor, I have already made an extensive review going through this etf in more detail.
Exposure to high-quality dividend-paying stocks
FGQI invests in high-quality dividend-paying stocks from around the world. The ETF's underlying index uses a proprietary methodology to identify companies with strong fundamentals. By investing in high-quality stocks, FGQI aims to provide investors with a stable income stream and potential capital appreciation over the long term.
Diversification across sectors and regions
FGQI is a globally diversified ETF, which means it invests in stocks from different sectors and regions. The ETF's top holdings include companies from the United States, Japan, and the United Kingdom, among others. By investing in a diversified portfolio of stocks, FGQI aims to reduce risk and optimize returns for investors.
Low expense ratio
FGQI has a relatively low expense ratio of 0.4%, meaning investors can keep more of their returns. The ETF's low expense ratio makes it an attractive option for investors who want to invest in a diversified portfolio of dividend-paying stocks without paying high fees. Again this expense ratio is relative as the expense ratios in Europe are quite high for many ETFs available, ideally, I would have liked to see it lower.
Potential for capital appreciation
While FGQI primarily focuses on providing investors with a stable income stream, the ETF also has the potential for capital appreciation over the long term. By investing in high-quality dividend-paying stocks, FGQI aims to provide investors with a total return that includes dividend income and capital appreciation.
Strong historical performance
FGQI has delivered a compound annual growth rate (CAGR) of 9.6% as of recently according to my calculation. Additionally, the ETF has a current dividend yield of 2.66%. While past performance is not a guarantee of future results, the fund has appreciated by over 33% in the last 5 years. While again, past performance doesn't guarantee future returns FGQI's strong historical performance could be an indicator of its potential for future growth.
Conclusion Investing in dividend ETFs like FGQI can be a great way to generate passive income and build long-term wealth. With exposure to high-quality dividend-paying stocks from around the world, decent expense ratio, decent dividend, and growth. FGQI could be a decent ETF to consider as a dividend investor and would be my choice if I could only choose one. Fortunately, I can mix and match ETFs as I would like to fit my strategy, goals, and outlook and don't have to rely on only choosing one, if I could choose only one ETF to invest in myself regardless of the strategy, I would personally choose given the current options: VWRL.
Disclaimer: I am not a financial advisor, this blog is centered around my opinion and should not be viewed as legal, professional, or financial advice. For me, it's crucial to supplement my knowledge with resources like videos, articles, and books to deepen my understanding of investing principles and strategies.
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