Investors seeking passive income can consider adding bond exchange-traded funds (ETFs) to their portfolios. They offer attractive yields and help spread risk by investing in a diversified pool of bonds with different maturities.
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Here, we will look at three bond ETFs with dividend yields above 4%: Vanguard Intermediate-Term Corporate Bond ETF (VCIT), iShares Broad USD High Yield Corporate Bond ETF (USHY), and iShares Core Total USD Bond Market ETF (IUSB).
TipRanks’ ETF Comparison Tool gives a snapshot of these ETFs across key metrics.
Vanguard Intermediate-Term Corporate Bond ETF (VCIT)
The VCIT ETF tracks the Bloomberg U.S. 5-10 Year Corporate Bond Index and aims to offer investors a moderate, sustainable level of current income by providing exposure to high-quality (investment-grade) corporate bonds. It comprises corporate bonds with maturities ranging from five to ten years, issued by highly reputable companies with a credible credit profile.
Interestingly, the VCIT ETF has paid about $3.927 per share in dividends over the past year. It offers a dividend yield of 4.72%.
iShares Broad USD High Yield Corporate Bond ETF (USHY)
The USHY ETF tracks the ICE BofA US High Yield Constrained Index and offers exposure to high-yield corporate bonds. Notably, high-yield bonds are generally rated below investment grade and are commonly referred to as “junk bonds.” However, these junk bonds are preferred by many investors for their potential to generate significant returns.
The USHY ETF has paid about $2.552 per share in dividends over the past year. It offers a dividend yield of about 6.86%.
iShares Core Total USD Bond Market ETF (IUSB)
The IUSB ETF tracks the Bloomberg US Universal Index and offers a comprehensive exposure to the broad U.S. bond market. It helps investors gain access to a diverse range of bonds, including government, corporate, and mortgage-backed securities. Consequently, it provides exposure to a variety of credit qualities, ranging from high-grade to high-yield.
With dividends of more than $1.956 per share paid over the past year, the IUSB ETF offers a dividend yield of 4.22%.
