Dividend Exchange-Traded Fund (ETF) known as CGDV offers passive income potential. However, its suitability as the ideal choice remains questionable.

Dividend Exchange-Traded Fund (ETF) known as CGDV offers passive income potential. However, its suitability as the ideal choice remains questionable.

In the realm of exchange-traded funds (ETFs) designed for passive income generation, a few dividend ETFs have emerged as top alternatives to the Capital Group Dividend Value ETF (CGDV). These ETFs boast higher yields and lower costs, providing investors with attractive options for stable dividend income.

One such ETF is the Schwab US Dividend Equity ETF (SCHD), which offers a strong yield of approximately 4.0% and a low expense ratio of around 0.06%. Morningstar rates this ETF highly, making it an excellent low-cost choice for those seeking dividend income.

Another contender is the Vanguard High Dividend Yield ETF (VYM), which provides a yield of 2.9% and an expense ratio of 0.06%. This ETF is large and diversified, offering good yield and low cost.

The SPDR Portfolio S&P 500 High Dividend ETF (SPYD) is another option, offering a higher yield of around 4.5% with similarly low costs. However, SPYD is less diversified and has a higher exposure to real estate investment trusts (REITs), which may affect its tax efficiency.

For even higher yields, bond-focused high-yield ETFs like the SPDR Portfolio High Yield Bond ETF (SPHY) offer yields of 7.7% or more. However, these ETFs are not equity dividend ETFs and carry different risk profiles compared to their counterparts.

Meanwhile, the Capital Group Dividend Value ETF (CGDV) remains a significant player in the dividend ETF market, with nearly $17.7 billion in assets under management (AUM). CGDV primarily invests in larger U.S. companies that pay dividends, providing investors with an above-average dividend yield compared with the S&P 500.

The iShares Core High Dividend ETF, another notable competitor, has 75 companies in its holdings and a dividend yield of around 3.5%. Every $10,000 invested in this ETF would cost $8 annually, compared to $33 for CGDV.

CGDV is an actively managed fund that seeks to invest in companies that produce above-average dividend income and can grow in value. The top five holdings of CGDV include Microsoft, Broadcom, RTX, British American Tobacco, and GE Aerospace.

In conclusion, for passive income with higher yields and lower costs than CGDV, consider SCHD, VYM, or SPYD for equity dividends, and SPHY if you are open to bond income with higher yields. Each of these ETFs offers unique advantages and risks, so it's essential to research and understand the investment objectives before making a decision.

• The Schwab US Dividend Equity ETF (SCHD) and the Vanguard High Dividend Yield ETF (VYM) are alternatives in personal-finance investing, as they offer higher yields and lower costs than the Capital Group Dividend Value ETF (CGDV).
• The SPDR Portfolio S&P 500 High Dividend ETF (SPYD) also represents a viable option for investors looking for a higher yield, although it has a less diverse portfolio and higher exposure to real estate investment trusts (REITs).
• Bond-focused high-yield ETFs like the SPDR Portfolio High Yield Bond ETF (SPHY) offer attractive yields, but they are not equity dividend ETFs and carry different risk profiles compared to ETFs like SCHD, VYM, or SPYD.

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