The key to picking dividend funds is to focus on total return and not only dividend yield. The highest-yielding stocks likely have worse prospects than lower-yielding names. Market participants identify firms with declining fundamentals, and these stocks' prices reflect their slumping prospects ahead of them cutting or stopping dividend payments.
Schwab U.S. Dividend Equity ETF (SCHD) is a compelling fund for exposure to profitable, large-cap U.S. stocks with attractive dividend yields. Focusing on profitability and yield lowers the risk that the portfolio holds companies that cannot support their dividend payments. A low fee adds to this sensible strategy's edge over its peers. It earns a Morningstar Analyst Rating of Silver.
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Adam McCullough has a position in the following securities mentioned above: AAPL. Find out about Morningstar’s editorial policies.