One of the questions I get the most is:
"I want to start dividend investing, but I only have a few hundred dollars. Where do I even begin?"
Truth is, most popular dividend ETFs are way out of reach. VM trades over $150 per share, DVY is $153+, and VO? Over $600! 😬
But here’s the good news: there are three dividend ETFs under $50 right now that can help you start building passive income—even if you only have $50 to start. One of them pays over 4.8% yield, another just did a 3-for-1 stock split, and the third quietly returned almost 22% last year—and barely anyone is talking about it.
⚠️ Quick disclaimer: I’m not a financial adviser. Always do your own research before investing.
Let’s break them down.
1️⃣ SCHD – Schwab U.S. Dividend Equity ETF
This is one of the most popular dividend ETFs in the investing community. Before October 2024, a single share cost around $85—making small investments hard.
But Schwab did a 3-for-1 stock split, dropping the price to just $31.11 today.
- $500 buys 16 shares
- $5,000 buys 160 shares
- Dividend yield: 3.37%
- 10-year annualized return: 12.8%
Top holdings include Broadcom, AbbVie, Coca-Cola, and Home Depot.
💡 Example: If Harry invests $5,000 today, he’d earn roughly $168.50 per year in dividends. Start small, add $500/month, and in 5 years, that could grow to $1,200+ per year in passive income.
SCHD is the foundation ETF—reliable, proven, and easy to own.
2️⃣ SPYD – SPDR Portfolio S&P 500 High Dividend ETF
SPYD works differently. Instead of picking quality stocks, it buys the 80 highest-yielding S&P 500 stocks—equal weighted, so every company gets the same slice of the pie.
- Price: $47.25
- Dividend yield: 4%+
- Expense ratio: 0.07%
This fund is built for income. Over 21% is in REITs, 13% in utilities, 17% in financials—less tech, more cash flow.
💡 Example: $5,000 in SPYD gets you 105 shares, paying around $24/year—higher than SCHD. Perfect for tax-advantaged accounts like a Roth IRA.
5-year annualized return: 9.7%, with more cash in your pocket per dollar invested.
3️⃣ FDL – First Trust Morningstar Dividend Leaders Index Fund
Here’s the hidden gem. FDL quietly returned 21.95% in the last 12 months—not S&P 500, not just a dividend ETF, but a real powerhouse.
- Price: $44.72
- Dividend yield: 4.85% (highest on this list)
- Expense ratio: 0.43%
Top holdings include Exxon Mobil, AbbVie, Philip Morris, Verizon, and Chevron. Energy and healthcare dominate.
💡 Example: $5,000 investment = 111 shares, roughly $242.50/year in dividends. Over 5 years with $500/month, it could grow to $42,100.
FDL is for those who want highest yield and strong total returns, even with a slightly higher expense ratio.
So, which ETF should you start with?
- SCHD – Safe, low fees, reliable.
- SPYD – Max current income, tax-advantaged accounts, REIT exposure.
- FDL – Hidden gem, highest yield, strong total returns.
Best part? All three are under $50 per share. $5,000 total could get you shares in all three, holding 280+ companies and averaging ~4% yield—all for less than 20 cents/day in fees.
💡 You don’t need $20,000 to start dividend investing. You just need $50 and a plan.
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