RDVY Is a Popular Dividend ETF for Passive Income. But Is It the Best?
This ETF focuses on dividend growth stocks instead of chasing the highest yields.
When it comes to passive income, many investors often flock to the stocks with the highest dividend yields. But the companies that pay the highest dividends might also have the least room to grow because there's nowhere left to invest their excess cash.
That's why some stocks that pay lower dividends could outperform higher-yielding ones over the long term. So to get the right balance of growth and income, investors should look for dividend growth stocks (companies that consistently hike their payouts while growing their earnings) instead of merely buying the stagnant ones with the highest yields.
Image source: Getty Images.
