A high yield, combined with a diversified portfolio of holdings, a low expense ratio and a dividend yield of 2.9% above that of the S&P 500 November yield of 1.75%, is certainly what some might consider a great offer for reliable retirement income.
Since the Fed is hinting at three rate hikes in 2022, it could benefit retirees to invest in ETFs that offer protection against those rates. The Fidelity Dividend ETF for Rising Prices (NYSEMKT: FDRR) can do just that. This fund focuses on tracking large and mid-cap stocks that have historically paid and increased dividends and have a positive correlation with 10-year US Treasuries.
Top positions include: Apple, Microsoft, UnitedHealth, Pfizer, and DIY store, which offers a well-rounded group of stocks in various sectors. It also gets rid of a heavy reliance on its top positions by investing only 30% of its total fund weight in the top 10 positions.
In times of market uncertainty, government bond yields can provide investors with relief. Treasury bill yields are tied to Treasury bills that are backed by the United States government and come with guaranteed interest payments. As market volatility increases, investments in this fund may provide some stability.