Global stock markets remain under pressure as the U.S.-Iran conflict continues, with no concrete resolution in sight. Given elevated oil prices and an uncertain macro backdrop, there are growing fears of an economic slowdown. In this scenario, investors seeking passive income can consider adding bond exchange-traded funds (ETFs) to their portfolios. Bond ETFs offer attractive yields and the benefit of diversification at a low cost.
Claim 30% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Here, we will look at three bond ETFs with very high dividend yields: iShares Broad USD High Yield Corporate Bond ETF (USHY), Schwab High Yield Bond ETF (SCYB), and SPDR Portfolio High Yield Bond ETF (SPHY).
TipRanks’ ETF Comparison Tool gives a snapshot of these ETFs across key metrics.
iShares Broad USD High Yield Corporate Bond ETF (USHY)
The USHY ETF tracks the ICE BofA US High Yield Constrained Index and is suitable for investors seeking exposure to high-yield bonds, often referred to as “junk bonds” due to their higher risk. However, these junk bonds are often preferred by risk-taking investors for their potential to generate significant returns.
Interestingly, 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%.
Schwab High Yield Bond ETF (SCYB)
The SCYB ETF tracks the ICE BofA US Cash Pay High Yield Constrained Index and offers exposure to U.S. dollar-denominated below-investment-grade corporate debt. It is suitable for risk-taking investors seeking high yields. It provides diversified exposure to high-yield bonds across various maturities.
The SCYB ETF has paid $1.833 per share in dividends over the past year. It offers a dividend yield of about 7%.
SPDR Portfolio High Yield Bond ETF (SPHY)
The SPHY ETF tracks the ICE BofA US High Yield Index and offers exposure to U.S. dollar-denominated high-yield bonds with a below-investment-grade rating and at least 18 months to final maturity at the time of issuance. It is suitable for investors who are aware of the inherent risks of junk bonds but still prefer them for the potential for higher returns.
With dividends of more than $1.714 per share paid over the past year, the SPHY ETF offers a dividend yield of 7.28%.
