Earning passive income is one of the most important factors in a comfortable retirement. But where do you start?

Many investors nearing retirement turn to dividend-paying exchange-traded funds (ETFs). These are professionally managed funds that invest in the stocks of hundreds or even thousands of companies, so they offer instant diversification. And a steady stream of income in the form of dividends could mean you put retirement savings on cruise control. Dividends are payments companies make to shareholders from their profits. You can think of it as a bonus in addition to what you earn from the growth of your shares.

But there are hundreds of dividend-paying ETFs out there. How then can you know which ones are right for you? While that depends heavily on factors like your risk tolerance and investment goals, we devised a list of some high-yield ETFs that could fit just right in most retirees’ portfolios. Let’s take a closer look.

Schwab US Dividend Equity ETF (SCHD)

The Schwab U.S. Dividend Equity ETF (SCHD) is a very popular ETF among investors. It’s designed to reflect the returns of the Dow Jones U.S. Dividend 100 index. However, the fund managers screen the companies it invests in for strong financials and consistent dividend payments. As a result, the SCHD is a high-quality, high-dividend-paying fund with an impressive yield of nearly 4 percent. It also shines when it comes to costs. It has an ultra-low expense ratio of 0.06 percent. Expense ratios are annual fees that can eat away at your returns. But the SCHD has an expense ratio that’s among the lowest in the industry. This means you keep more of your returns.

The fund’s main holdings lie in the energy, consumer defensive (staples), and health care sectors. These are considered defensive industries that can remain stable even during times of economic turmoil.

Vanguard High Dividend Yield ETF (VYM)

The Vanguard High Dividend Yield ETF (VYM) stands out for its diversification and low costs. The fund tracks the FTSE High Dividend Yield Index. This index contains large-cap stocks that tend to pay large dividends. Most of its holdings are in the financial, industrial, and technology sectors. It also boasts an impressive five-year return of more than 102 percent.

It’s managed by Vanguard, which is known for its low cost funds. And the VYM is no exception: its expense ratio is a low 0.06 percent.

iShares Core High Dividend ETF (HDV)

The iShares Core High Dividend ETF (HDV) is another fund that stands out for diversification as it invests in nearly 100 stocks. It screens stocks for high dividend payments. Plus, it has a competitive expense ratio of 0.08 percent.

Most of its holdings are in defensive sectors, which could offer stability and protect you against downside risk. And it has a yield of 3.3 percent. Plus, it earned a Morningstar Silver Medalist rating. Its main holdings are mostly in sectors such as health care and consumer staples. It invests in companies such as Johnson & Johnson, Exxon, and Chevron. Due to its diversification across large-cap stocks, many investors use this fund as part of their core portfolio. It boasts a five-year return of 12.76 percent.

JPMorgan Equity Premium Income ETF (JEPI)

The JPMorgan Equity Premium Income ETF (JEPI) is an actively managed fund that earns income by investing in stocks as well as call options. It has a high yield of 8.62 percent. And despite it being an active fund, its expense ratio remains competitive at 0.35 percent. The fund also stands out for its five-year return of 10.62 percent.

Vanguard International High Dividend Yield ETF (VYMI)

So far, we’ve discussed ETFs that invest in domestic equities. But the International Vanguard International High Dividend Yield ETF (VYMI) adds another layer of diversification as it invests in international non-U.S. companies. It has been around since the 1970s and carries a competitive expense ratio of 0.17 percent. It tracks the FTSE All-World ex U.S. High Dividend Yield Index, which focuses on companies in emerging markets. And it has an impressive track record with a five-year return of nearly 16 percent.

The Bottom Line

Investing in dividend ETFs can be a great way to earn passive income. The funds on this list stand out for their low fees, high yields, and decent returns. But these aren’t your only options. The right ETFs for you depend on factors like your individual goals, risk tolerance, and time horizon. It’s important to consider these things before investing in any high-yield ETF.

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