The 10 Best Dividend Funds to Buy Now

VanEck

Expenses: 0.41% (includes 5-basis-point fee waiver)
Dividend Yield: 5.9%

Preferred stocks aren’t the most well-covered area of the stock market, but they’re a fantastic source of income for risk-averse investors.

Preferred stocks are so-called “hybrid” stocks that have some stock-like attributes, but also resemble bonds in other ways. For instance, preferred stocks trade on an exchange just like a common stock, but unlike commons, preferreds typically don’t include voting rights. Preferred stocks also typically pay a fixed dividend based on a par rate assigned when shares are issued, however, which more resembles bonds and their coupon payments.

Preferred stocks’ prices tend not to move around much, so while they’re safe, they typically don’t have much capital appreciation potential. But they do tend to yield between 5% and 7%, which is where the income appeal comes in.

The VanEck Vectors Preferred Securities ex Financials ETF (NYSEARCA:PFXF) holds 112 such stocks at the moment. Where VanEck differs from many other preferred stock ETFs is that it doesn’t invest in the preferreds of financial companies — a response to the 2008-09 financial crisis and market crash. Instead, holdings are concentrated most heavily in REITs (27.2%), electric utility companies (26.2%) and telecoms (14.3%).

PFXF might be unorthodox, but it also boasts one of the best yields among preferred ETFs at just under 6% presently, and it’s priced at a dirt-cheap 41 basis points that comes in below most comparable funds.

Check out PFXF’s provider page for more information.