5 Dirt-Cheap Index Funds That Invest in Dividend Stocks

Dividend investors typically rely on their regular income payments to either pay the bills or grow their nest eggs via reinvestment.

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Dividend investors typically rely on their regular income payments to either pay the bills or grow their nest eggs via reinvestment. Either way, it’s vital that every possible cent in distributions makes it back into the hands of the investor – one of the benefits of investing for income via dirt-cheap index funds.

Generally speaking, buying an exchange-traded fund (ETF) or other diversified fund offers something of a safety net. While investors can go the stock-picking route and hold onto a handful of picks, a fund provides wide diversification across dozens or even hundreds of stocks, shielding the investment from the potential for a sudden detrimental shock to a single company.

The flip side? Funds aren’t free. The Morningstar “Large Value” category, in which many basic U.S. dividend mutual funds can be found, averages 1.05% in annual expenses – that means for every $10,000 one invests, $105 is going toward paying managers, office personnel, building costs and the like. That effectively neutralizes part of the yield earned from the fund.

However, many dividend index funds charge far less. The following is a look at five dirt-cheap ETFs across several sub-categories that will help investors keep more of their regular income checks.

Data is as of Feb. 16, 2018. Yields represent the trailing 12-month yield, which is a standard measure for equity funds. Click on ticker-symbol links in each slide for current share prices and more.<

Kyle Woodley
Senior Investing Editor, Kiplinger.com

Kyle is senior investing editor for Kiplinger.com. As a writer and columnist, he also specializes in exchange-traded funds. He joined Kiplinger in September 2017 after spending six years at InvestorPlace.com, where he managed the editorial staff. His work has appeared in several outlets, including U.S. News & World Report and MSN Money, he has appeared as a guest on Fox Business Network and Money Radio, and he has been quoted in MarketWatch, Vice and Univision, among other outlets. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.