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Vanguard High Dividend Yield ETF (VYM)

A lot of companies pay dividends, but some are more generous than others.

If you want to invest in a portfolio of companies that are characterized by oversized payouts, consider the Vanguard High Dividend Yield ETF.

The fund takes a passive, full replication approach to track the performance of the FTSE High Dividend Yield Index. It holds 443 stocks, so it is well diversified.

The ETF’s top holdings include household names like Johnson & Johnson (JNJ) and Procter & Gamble (PG) — companies that have been paying increasing dividends for decades.

VYM also boasts a very low expense ratio of 0.06%.

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iShares U.S. Dividend and Buyback ETF (DIVB)

Paying dividends isn’t the only way to return cash to investors. Companies can also repurchase their shares. When a company buys back its stock, it reduces the number of shares outstanding, allowing each remaining investor to own a larger portion of the business.

If you want to follow the buyback theme, look into the iShares U.S. Dividend and Buyback ETF.

The fund tracks the Morningstar US Dividend and Buyback Index, which consists of companies with a history of dividends and share repurchases. Its expense ratio is 0.25%.

Right now, DIVB holds 319 stocks, with its three top holdings being Apple (AAPL), Microsoft (MSFT), and Meta Platforms (FB). In 2021, Apple spent $88.3 billion on buybacks, Microsoft spent $29.2 billion, and Meta bought back $50.1 billion of its own shares.

Pacer US Cash Cows 100 ETF (COWZ)

Free cash flow represents the money a company generates after all expenses — including capital expenditures — are paid. If a company generates a lot of free cash flow, it’s typically in a good position to return cash to investors.

That’s why the Pacer US Cash Cows 100 ETF is a potentially timely opportunity.

The fund is based on the Pacer US Cash Cows 100 Index, which screens the Russell 1000 Index to arrive at 100 companies with the highest free cash flow yield. Currently, its top three holdings are Valero Energy (VLO), Dow (DOW), and Occidental Petroleum (OXY).

The index is reconstituted and rebalanced on a quarterly basis. COWZ has an expense ratio of 0.49%.

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Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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