Latest news with #indexfunds
Globe and Mail
23-05-2025
- Business
- Globe and Mail
Building a Passive Income Stream: 3 Top Dividend ETFs for Long-Term Returns
There are dozens of excellent low-cost index funds that pay dividends and could be great choices for long-term investors. However, a few stand out as particularly good combinations of income, long-term total return potential, and truly passive set-it-and-forget-it qualities. Most of my favorite income ETFs are Vanguard products, and it's easy to see why. Vanguard ETFs have some of the lowest expenses in the industry, and there are dozens of excellent index funds to choose from, in both mutual fund and ETF forms. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » With that in mind, here are three Vanguard ETFs that could help you create a passive income stream for decades to come in your portfolio. Not the highest-paying ETF, but... At first glance, the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG), with a 1.8% yield, might not sound like a great choice. But there are a few things to keep in mind. First, this is an index fund that focuses on stocks that are most likely to grow their dividends over time. So, if you want to create a passive income stream but are still a decade or more from retirement, this ETF is likely to produce a significantly higher amount of income in the future. Second, because it isn't too focused on the highest-yielding stocks, the portfolio of the Vanguard Dividend Appreciation ETF is a bit more growth-oriented than your traditional income ETF. In fact, the technology sector is its highest concentration, with top holdings that include Broadcom (NASDAQ: AVGO), Microsoft (NASDAQ: MSFT), and Apple (NASDAQ: AAPL). The proof is in the performance. Over the past decade, this ETF has generated 11.2% annualized total returns, and with a rock-bottom 0.05% expense ratio, you'll get to keep most of the fund's gains. International exposure at a discount One of the ETFs I've been buying rather aggressively in my own portfolio is the Vanguard International High Dividend Yield ETF (NASDAQ: VYMI). As the name suggests, this tracks an index of non-U.S. companies that pay above average dividend yields. As of the latest information, the fund owns 1,560 different stocks and has a 4.2% dividend yield. Not only can international stock exposure help diversify your portfolio and help offset U.S.-specific risk factors (like the trade tensions), but international stocks in general look cheap right now. For example, the average stock in the Vanguard International High Dividend Yield ETF trades for just 11.6 times earnings, compared with a P/E of 18.2 for stocks in the U.S. focused counterpart ETF, the Vanguard High Dividend Yield ETF (NYSEMKT: VYM). It's also worth noting that although these are international stocks, that doesn't mean its full of companies you've never heard of. In fact, top holdings include household names such as Toyota (NYSE: TM), Shell (NYSE: SHEL), and Unilever (NYSE: UL). A great ETF for a falling-rate environment Although there are questions surrounding how soon and how aggressively the Federal Reserve will lower interest rates, the overwhelming consensus is that the direction of interest rates over the next couple of years is going to be downward. Real estate is perhaps the most rate-sensitive part of the stock market. When rates are lower, real estate investment trusts can borrow money in a more cost-effective way, and commercial property values tend to rise, as yield plays a major role in their valuation. The Vanguard Real Estate ETF (NYSEMKT: VNQ) has underperformed the market for several years, but this is mainly due to the interest rate environment and not because there is anything fundamentally wrong with the stocks it owns. While there's still tremendous uncertainty about where interest rates are heading in the short term, it could be a smart time for long-term investors to take a closer look at this ETF. A great combination of income, return potential, and peace of mind These certainly aren't the only three income ETFs I'm a fan of. There are some that take more active investment approaches on my radar, such as the options-focused JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ). However, as far as creating a truly passive income stream that you can simply set-and-forget goes, these three Vanguard Income ETFs could be excellent additions to your portfolio. Should you invest $1,000 in Vanguard Dividend Appreciation ETF right now? Before you buy stock in Vanguard Dividend Appreciation ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Dividend Appreciation ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $640,662!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $814,127!* Now, it's worth noting Stock Advisor 's total average return is963% — a market-crushing outperformance compared to168%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. *Stock Advisor returns as of May 19, 2025 Matt Frankel has positions in Vanguard International High Dividend Yield ETF and Vanguard Real Estate ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Vanguard Dividend Appreciation ETF, Vanguard Real Estate ETF, and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom and Unilever and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Bloomberg
22-05-2025
- Business
- Bloomberg
Index Funds Are a Bit More Illegal
Ten years ago last month, I first wrote about a then-novel theory that index funds are illegal. The theory is: When we first discussed this theory, I called it 'wonderful' but also 'mad.' It is clever, in that it draws logical conclusions from standard theories of (1) investment diversification and (2) corporate fiduciary duties to shareholders. But it had sort of a jokey flavor. In 2015, few people believed this theory that index-fund managers were telling companies to keep prices high. For one thing, they weren't. The big index-fund managers don't go have meetings with their portfolio companies to say 'hey you should stop competing and raise prices so we make more money.' They don't do that because it would be illegal, and because each of them only owns a minority stake in each company and can't tell managers what to do, and because they tend not to get too involved in the operational details of their portfolio companies. They own every company in the index, without making any specific investment decisions, so there is no reason for them to think about any company's pricing strategy.
Yahoo
18-05-2025
- Business
- Yahoo
2 No-Brainer Vanguard Index Funds to Buy With $1,500 Right Now
Index funds let investors diversify money across dozens or hundreds of stocks, but that does not mean they are inherently safe. The Vanguard S&P 500 ETF measures the performance of the S&P 500, a benchmark for the U.S. stock market that has consistently beaten most other asset classes. The Vanguard FTSE Europe ETF tracks more than 1,200 European companies, and the European economy could benefit from interest rate cuts and trade deals. 10 stocks we like better than Vanguard S&P 500 ETF › Index funds let investors spread money across dozens or even hundreds of companies, which mitigates the risk associated with highly concentrated portfolios. But index funds also come in different shapes in sizes, and it would be wrong to assume they are inherently good investments simply because they provide diversification. For instance, several index funds focused on artificial intelligence (AI) underperformed the S&P 500 (SNPINDEX: ^GSPC) last year despite booming interest in AI stocks. In fact, the First Trust Nasdaq AI and Robotics ETF actually declined 1% in 2024, even as the S&P 500 advanced 23%. So, investors must be choosy. With that in mind, the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the Vanguard FTSE Europe ETF (NYSEMKT: VGK) are smart places to put money right now. Investors with $1,500 could split the money 75/25 by purchasing two shares of the former and five shares of the latter. The Vanguard S&P 500 ETF measures the performance of the S&P 500, an index that includes 500 large U.S. companies that span all 11 market sectors. The S&P 500 is commonly regarded as the best gauge for the U.S. stock market. Funds that track the index let investors spread money across the most influential American businesses. The top five holdings in the Vanguard S&P 500 ETF are listed by weight below: Apple: 6.7% Microsoft: 6.2% Nvidia: 5.6% Amazon: 3.6% Alphabet: 3.5% S&P 500 index funds have historically been surefire investments when held long enough. For instance, the benchmark index generated a positive return over every rolling 11-year period during the last three decades. And anyone who held an S&P 500 index fund for the whole period would have seen their investment increase nearly 20 times in value, which equates to an annual return of 10.4%. Importantly, the S&P 500 has also outperformed most other asset classes during the last five, 10, and 20 years. That includes European, Asian, and emerging market equities, as well as fixed income, real estate, and precious metals, according to data from Morgan Stanley. That makes the Vanguard S&P 500 ETF a very compelling option for most investors. That is especially true given its cheap expense ratio of 0.03%, which means investors will pay just $3 annually on every $10,000 invested in the fund. The only secret is patience. Over the last decade, the S&P 500 suffered an average intra-year drawdown of 13%, meaning it typically fell sharply at some point during the middle of each year. However, not only did the index recover from every single drawdown, but it also returned 235% over the last decade despite those regular pullbacks. Investors who kept their money in an S&P 500 index fund rather than panic selling when the stock market tumbled were well-rewarded for their patience. The Vanguard FTSE Europe ETF measures the performance of more than 1,200 European companies. The index fund is most weighted toward companies in the United Kingdom (23%), France (15%), and Germany (14%), the three largest economies in Europe. The top five holdings are listed by weight below: SAP: 2.4% Nestlé: 2.1% ASML Holdings: 1.9% Novartis: 1.6% Roche: 1.6% The European Central Bank has cut its key interest rate seven times in the past year, a trend likely to continue in the coming months. Deutsche Bank economist Mark Wall expects another cut in June and thinks the key rate will drop 75 basis points by year-end. Also, negotiations with the Trump administration could result in trade deals that reduce tariff-related headwinds. Analysts currently expect Stoxx 600 companies (a European benchmark similar to the S&P 500) to report 1.9% earnings growth in 2025, a severe downward revision from the 5.8% earnings growth anticipated before President Donald Trump announced his "Liberation Day" tariffs. However, the economic uplift from lower interest rates and trade deals could lead to faster earnings growth than analysts expect. Here's the bottom line: The FTSE Europe ETF is Vanguard's top-performing index fund year to date, and that may continue in the remaining months of 2025 as economic tailwinds converge. Importantly, the FTSE Europe ETF is a particularly good choice for investors who want diversification beyond U.S. equities. The expense ratio is a reasonable 0.06%, much cheaper than the average fee on similar funds from other asset managers. Before you buy stock in Vanguard S&P 500 ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard S&P 500 ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor's total average return is 975% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Amazon, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends ASML, Alphabet, Amazon, Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends Nestlé and Roche Holding AG and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. 2 No-Brainer Vanguard Index Funds to Buy With $1,500 Right Now was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
08-05-2025
- Business
- Yahoo
The 40% return delivered to Singapore Post's (SGX:S08) shareholders actually lagged YoY earnings growth
Passive investing in index funds can generate returns that roughly match the overall market. But if you pick the right individual stocks, you could make more than that. For example, the Singapore Post Limited (SGX:S08) share price is up 38% in the last 1 year, clearly besting the market return of around 15% (not including dividends). So that should have shareholders smiling. Zooming out, the stock is actually down 13% in the last three years. After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals. Our free stock report includes 2 warning signs investors should be aware of before investing in Singapore Post. Read for free now. While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). Singapore Post was able to grow EPS by 123% in the last twelve months. It's fair to say that the share price gain of 38% did not keep pace with the EPS growth. So it seems like the market has cooled on Singapore Post, despite the growth. Interesting. The image below shows how EPS has tracked over time (if you click on the image you can see greater detail). SGX:S08 Earnings Per Share Growth May 8th 2025 We know that Singapore Post has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts. What About Dividends? As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Singapore Post's TSR for the last 1 year was 40%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return. A Different Perspective We're pleased to report that Singapore Post shareholders have received a total shareholder return of 40% over one year. That's including the dividend. Notably the five-year annualised TSR loss of 1.8% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Singapore Post (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
