Top Dividend ETFs for Passive Income in 2023

Investors are exploring top dividend ETFs for 2023 to generate passive income. With choices like Schwab U.S. Dividend Equity ETF and JPMorgan Equity Premium Income ETF, these investments focus on consistent cash flows and high yields, representing a strong opportunity.

Date: 23-02-2025

AI Rating: 7

Investment Options for Passive Income

The report emphasizes the advantage of dividend ETFs, presenting them as a hassle-free investment choice for generating passive income. Key ETFs highlighted include the Schwab U.S. Dividend Equity ETF (SCHD) and the JPMorgan Equity Premium Income ETF (JEPI), both offering higher yields compared to the S&P 500 average.

Free Cash Flow (FCF)

Coca-Cola and Chevron are noted for their strong free cash flow (FCF) growth. Coca-Cola’s FCF has benefited significantly from its vast range of brands, while Chevron anticipates more than 10% growth in average annual FCF, backed by its expansion strategy. This insight into FCF is crucial as it indicates the companies’ ability to sustain dividend payments and invest in growth opportunities.

Dividend Stability and Growth

Both Coca-Cola and Abbvie have shown impressive dividend histories, with Coca-Cola paying dividends for 103 years and Abbvie increasing its payout for 52 consecutive years. This consistent dividend payment enhances investor confidence and positively impacts stock prices, as companies capable of maintaining and growing dividends are often more attractive to investors, particularly those focused on income.

Implications of ETF Holdings

While SCHD and JEPI have diverse holdings, the report details that JEPI includes notable companies like Visa and Mastercard, which have high operating margins. Investments in such companies may improve overall ETF performance, particularly during volatile market conditions, further attracting investors.

The diverse sectors represented in these ETFs, from healthcare to energy, provide robust investment options while contributing to their appeal, given the current market uncertainty.

Stocks: SCHD KO ABBV CVX JEP V MA AMZN META