Global markets continue to grapple with high oil prices and geopolitical risks. Given this uncertain backdrop, passive investors can consider adding bond exchange-traded funds (ETFs) to their portfolios to earn a consistent stream of income. Bond ETFs offer the benefits of diversification at low cost.
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Here, we will look at three bond ETFs offering more than 6% yields: Schwab High Yield Bond ETF (SCYB), JPMorgan BetaBuilders USD High Yield Corporate Bond ETF (BBHY), and iShares ESG Advanced High Yield Corporate Bond ETF (HYXF).
TipRanks’ ETF Comparison Tool gives a snapshot of these three ETFs across key metrics.
Schwab High Yield Bond ETF (SCYB)
The SCYB ETF tracks the ICE BofA US Cash Pay High Yield Constrained Index and provides exposure to U.S. dollar-denominated below-investment-grade corporate debt. Generally, these high-yield bonds with lower credit ratings are referred to as “junk bonds” due to the risk of capital loss relative to investment-grade bonds. However, risk-taking investors prefer these bonds for their high-income potential. By including bonds across various maturities, the SCYB ETF aims to mitigate interest rate risk and provide a balanced risk-return profile.
Notably, the SCYB ETF has paid about $1.819 per share in dividends over the past year. It offers a dividend yield of 6.96%.
JPMorgan BetaBuilders USD High Yield Corporate Bond ETF (BBHY)
The BBHY ETF tracks the ICE BofA US High Yield Index and provides exposure to U.S.-dollar-denominated corporate debt with below-investment-grade credit ratings. It is suitable for investors seeking higher returns than traditional investment-grade bonds and willing to accept the risks associated with such securities.
The BBHY ETF has paid about $3.177 per share in dividends over the past year. It offers a dividend yield of 6.91%.
iShares ESG Advanced High Yield Corporate Bond ETF (HYXF)
The HYXF ETF tracks the Bloomberg MSCI US High Yield Choice ESG Screened Index and includes U.S. dollar-denominated high-yield corporate bonds from issuers with a favorable environmental, social, and governance (ESG) rating. Interestingly, HYXF ETF avoids bonds issued by companies with low ESG ratings and/or major controversies and applies stringent screens, including those related to fossil fuel activities.
With dividends of about $2.870 per share paid over the past year, the HYXF ETF offers a dividend yield of 6.16%.
