Who doesn’t want more passive income? After all, it’s basically the key to financial freedom. The more income an individual can generate from their assets, the more freedom they have to spend as they please.

With that in mind, let’s take a look at two exchange-traded funds (ETFs) that can help investors boost their passive income.

Invesco S&P 500 High Dividend Low Volatility ETF

First up is the Invesco S&P 500 High Dividend Low Volatility ETF (NYSEMKT: SPHD).

There are several reasons to like this fund, but topping the list is the fund’s overall strategy. It tracks an index comprised of high-dividend stocks from within the S&P 500 that show the least amount of volatility. In turn, the fund combines a solid dividend yield of 3.5% with a wide range of blue chip stocks.

The fund’s holdings are diverse and span multiple sectors. The most represented industries include utilities (20% of all holdings), consumer staples (18%), and financials (15%).

The fund was started in 2012, and has a lifetime performance of 215%. That works out to a compound annual growth rate (CAGR) of 10.1%. To put it another way, $10,000 invested in the fund in 2012 would have grown to $31,500 as of this writing.

As for costs, the fund has an expense ratio of 0.30%. That means investors pay $30 a year in fees for every $10,000 invested in the fund.

Vanguard International High Dividend Yield ETF

Next is the Vanguard International High Dividend Yield ETF (NASDAQ: VYMI).

Unlike the Invesco fund discussed above, which focuses on American companies, this Vanguard fund holds mostly international stocks. While I tend to prefer American companies to their foreign competitors, I’m making an exception in this case.

That’s because there are many excellent foreign companies that also pay high dividends — making them ideal holdings for investors looking to boost their passive income.

This Vanguard fund’s holdings are extremely diverse, with 49% of its holdings based in Europe, 38% in Asia, and 11% in North, Central, and South America.

The fund also boasts sector diversity. The largest industries represented are finance (37% of holdings), energy (8%), and consumer staples (6%).

The fund’s current dividend yield of 4.4% should catch the eye of income-seeking investors, while its 0.22% expense ratio will make cost-conscious investors smile.

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The fund, which was founded in 2016, has a solid performance history. Over the last five years, the fund has generated a total return of 55% — meaning a $10,000 investment made in 2019 would have grown to about $15,500 as of this writing. On an annualized basis, the fund has generated a CAGR of 9.2%.

While each of these two ETFs offers distinct features (one is focused on the U.S. equity market, one is focused on international companies), both ETFs can help investors increase their passive income thanks to the solid dividend payments each fund passes along, combined with their reasonable fees. Either (or both) of these funds would be a wise choice for income-oriented investors.

Should you invest $1,000 in Invesco Exchange-Traded Fund Trust II – Invesco S&P 500 High Dividend Low Volatility ETF right now?

Before you buy stock in Invesco Exchange-Traded Fund Trust II – Invesco S&P 500 High Dividend Low Volatility ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco Exchange-Traded Fund Trust II – Invesco S&P 500 High Dividend Low Volatility ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $716,988!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 30, 2024

HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Jake Lerch has positions in Altria Group, Invesco Exchange-Traded Fund Trust II – Invesco S&P 500 High Dividend Low Volatility ETF, Novartis, and Pfizer. The Motley Fool has positions in and recommends Bristol Myers Squibb, Crown Castle, Kinder Morgan, Pfizer, and Realty Income. The Motley Fool recommends Dominion Energy, Verizon Communications, HSBC Holdings, Nestlé, Roche Ag, Unilever, and Vici Properties. The Motley Fool has a disclosure policy.

2 High-Yield Dividend ETFs to Buy to Generate Passive Income was originally published by The Motley Fool

It’s nearly impossible to time the market, so investors shouldn’t bother. However, it’s a good idea for investors to be aware of big events that could move the market — and potentially their portfolio — in a big way. If nothing else, knowing about a big event in advance can help investors manage their stress better and ride out any volatility in a much calmer manner. As it happens, a big move could be approaching. Here’s why tomorrow could be a big day for the stock market.

Important economic data

At 8:30 a.m. tomorrow, the U.S. Bureau of Labor Statistics will release its monthly nonfarm payrolls report for September. This occurs on the first Friday of each month, detailing how many jobs the U.S. economy added in the preceding month that just concluded. People typically refer to this as the “jobs report.”

The jobs report details many important data points that help paint a picture of the labor market, which is critical for many investors and economists, including the Federal Reserve. The jobs report shows how many jobs the U.S. economy added in the preceding month, the new unemployment rate, and other metrics like wage growth. Remember, consumer spending makes up 68% of the U.S. economy, so the state of the labor market is a big driver of the health of the consumer.

You can bet that Fed Chair Jerome Powell will pay close attention to the data tomorrow, as he and the rest of the Federal Open Market Committee try to forge a path ahead for its interest rate-cutting campaign that began with a half-point cut just a few weeks ago. While the Fed is likely to continue cutting interest rates, perhaps the biggest question is by how much?

According to CME Group’s FedWatch Tool, more than 61% of traders earlier this week were betting on a quarter-point cut by the Fed in November and then another half-point at the Fed’s December meeting. Traders expect the federal funds rate to fall to a target range of 2.75% to 3% by December 2025. The jobs report tomorrow could potentially change the whole trajectory of the forward curve and how the market perceives the future path of the Fed.

If the jobs report shows a weaker labor market than expected, the Fed may grow concerned about a looming recession and may be more likely to do larger cuts like the one it just did or even lower interest rates more than the market expects long-term. However, if the jobs report shows a stronger labor market, the Fed may not cut rates as much because it won’t want to stimulate the economy too much and risk potentially reigniting inflation.

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What to look for

Estimates vary slightly, but most economists expect the U.S. economy to have added between 140,000 and 150,000 jobs in September. They also expect the unemployment rate of 4.2% to remain at that level or tick up slightly to 4.3%.

It is difficult to know how the market will react to either situation. Lower interest rates generally support higher stock prices, so in one sense, investors may want to see a weaker-than-expected labor market. However, the market in recent months has been touchy on any signs of a potential recession. A weaker labor market may revive those fears. A stronger-than-expected jobs report could bolster the claim that fewer interest rate cuts are needed, which investors may not like. But that would also show a stronger economy not on the brink of recession, which investors might cheer. With the market’s view of the Fed, the trajectory of interest rates, and the economy all pretty favorable right now, I suspect that no surprises from the jobs report tomorrow might win the day.

But again, I don’t know. Long-term investors should be aware that there could be some volatility tomorrow. Most probably don’t need to do anything. Some may want to examine certain positions based on what happens tomorrow, but volatility has become a fairly consistent part of the market in recent years. It usually is just a small obstacle on a much longer road.

Should you invest $1,000 in CME Group right now?

Before you buy stock in CME Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CME Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $728,325!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 30, 2024

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool recommends CME Group. The Motley Fool has a disclosure policy.

Why Tomorrow Could Be a Big Day for the Stock Market was originally published by The Motley Fool

When it comes to growth potential over time, few stocks have matched Amazon (NASDAQ: AMZN). The e-commerce pioneer has evolved from an online bookseller to a conglomerate that leads the way in several niches of retail and technology.

In hindsight, if one had the patience to wait and the fortitude to ride out massive declines, a $1,000 investment in the company’s initial public offering (IPO) would have paid off handsomely for shareholders.

Amazon’s growth

A $1,000 investment at the closing price on the day of the IPO and not sold would be worth roughly $1.87 million today. The stock made its debut on May 15, 1997, at a pre-split closing price of $23.50 per share ($0.098 per share split-adjusted). Assuming one could buy fractional shares, the 42.55 shares bought on that day would have grown to 10,212 shares worth $182.69 each as of the time of this writing.

Those who owned the stock for the entire 27-year history haven’t been on a predictable or easy path.

Investors may have anticipated Amazon would venture beyond the sale of just books, it was next to impossible to predict the huge variety of products it would sell or that it would spearhead the cloud computing industry through Amazon Web Services (AWS). This is critical because AWS generates the majority of its operating income.

Investors also endured a brutal sell-off during the dot-com bust. Between 1999 and 2001, Amazon’s stock fell as much as 95% and didn’t return to its 1999 high until 2009.

For a time, that drop made it look more like many of the failed online retailers at the time. Hence, investors would have had to have a strong belief in the vision of founder Jeff Bezos to hold their shares through that period.

Ultimately, the history of Amazon stock outlines both the rewards and the difficulties of IPO investing. While the potential returns can be massive, it typically takes vision, analysis skills, discipline, and a high pain tolerance to identify such investments early and allow them to grow to their full potential.

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $728,325!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

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See the 10 stocks »

*Stock Advisor returns as of September 30, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

If You’d Invested $1,000 in Amazon Stock 27 Years Ago, Here’s How Much You’d Have Today was originally published by The Motley Fool

Consumer spending drives most of the U.S. economy, but industrial companies are the foundation of modern life in the United States. Thanks to the work of certain industrial companies, people are, in general, safer, healthier, and enjoy more basic luxuries than decades ago.

These companies enjoy enormous market opportunities, leadership in their fields, and strong financials that create sustained earnings growth, dividends, and investment returns.

Investing doesn’t always need to be complicated. Sometimes, what’s worked in the past will likely continue working. Here are three industrial dividend-paying companies investors can confidently buy and hold for at least the next decade.

1. Lockheed Martin

Defense contractor Lockheed Martin (NYSE: LMT) is critical in protecting the United States and its allies. The company sells air, land, sea craft, weapons systems, and technology to the U.S. military. War is terrible, but the unfortunate reality is that America’s role as a world power tends to draw the country into various geopolitical conflicts. Currently, the United States is supporting Ukraine and Israel in their respective conflicts in Europe and the Middle East. The U.S. defense budget ebbs and flows, but generally heads higher over time and is poised to continue rising.

Lockheed Martin has benefited from that spending, generating steady growth that has fueled 22 consecutive years of dividend growth and market-beating total returns over the past decade. Lockheed Martin’s dividend payout ratio is only 47% of its estimated 2024 earnings. Plus, the dividend offers a solid 2.1% starting yield.

Lockheed Martin produces the F-35 Lightning II, the world’s most expensive weapons program. That program should help drive long-term growth, leading to higher earnings and dividends for the next decade.

2. Emerson Electric

Companies must evolve to continue growing as the world changes. Emerson Electric (NYSE: EMR) has enjoyed decades of success as a prominent industrial conglomerate. The stock is a Dividend King because the company has paid and raised its dividend for 67 consecutive years. Yet, the company hasn’t rested on its laurels. Over the past few years, Emerson has restructured itself, shedding undesirable businesses and acquiring new ones to position itself for long-term growth in renewable energy, factory automation, and industrial software.

Emerson should continue raising its dividend for years. Its dividend payout ratio is just 38% of estimated 2024 earnings and yields 1.9% at the current share price. Emerson’s management team targets double-digit annualized earnings growth through economic ups and downs, which could mean hefty raises that don’t move the payout ratio much. With healthy growth on the horizon, now might be the best time in years for dividend investors to check out Emerson.

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3. Badger Meter

Water is a basic necessity, but it isn’t easy to filter, treat, and transport it to everyone. Even in the United States, the water systems need more investment. The American Society of Civil Engineers 2021 Infrastructure Report Card graded U.S. water infrastructure at a C-, and it’s far worse in many places worldwide. Badger Meter (NYSE: BMI) sells products that help control and monitor water flow and quality, and has enjoyed years of strong growth. The stock has been an absolute rock star, outperforming the S&P 500 index by roughly 10-to-1 over the past few decades.

The company’s success has enabled management to shower investors with dividends. Badger Meter has raised its dividend for 32 consecutive years, with an average increase of 11% over the most recent decade. There is plenty of room for future growth, too. The dividend will only take up 33% of Badger Meter’s estimated 2024 earnings, and analysts believe the company’s earnings will grow by an average of 18% annually over the next three to five years. The yield is only 0.6% today, but a decade of double-digit dividend growth adds up.

Those looking for rapid dividend growth and potential market-beating returns should check out this under-followed water stock.

Should you invest $1,000 in Lockheed Martin right now?

Before you buy stock in Lockheed Martin, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lockheed Martin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $716,988!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 30, 2024

Justin Pope has positions in Emerson Electric. The Motley Fool has positions in and recommends Emerson Electric. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.

Buy These 3 Dividend Stocks Today and Sleep Soundly for a Decade was originally published by The Motley Fool