Adding ETFs to our portfolio is a quick and simple way in order to gain instant diversification, at a low cost, while maintaining liquidity.
I recently published a list of the best Vanguard dividend ETFs and thought it would only be appropriate to do a similar round-up for Fidelity.
Spoiler Alert: Fidelity has less options than Vanguard (we’ll get to why in a moment).
As a result, today we’ll be looking at the best Fidelity dividend ETFs for those looking to add more dividend-centric ETFs to their portfolio.
Let’s dive in!
Best Fidelity Dividend ETFs (Summary)
In case you are in a hurry, here is a summary of the two best Fidelity dividend ETFs:
| ETF Fund Name | Ticker Symbol | Asset Class | Total Return (Avg Annual) | Expense Ratio | Dividend Yield (TTM) |
|---|---|---|---|---|---|
| Fidelity High Dividend ETF | FDVV | U.S. Equity | +10.45 | 0.29% | 3.44% |
| Fidelity Dividend ETF for Rising Rates | FDRR | U.S. Equity | +10.73 | 0.29% | 2.75% |
What I found interesting is that Fidelity only offers 2 dividend-focused ETFs (as opposed to Vanguard’s 4). This brings up something that I wanted to quickly mention: always do your research.
While sifting through Fidelity’s ETF offerings, I found a lot of “high-yield” ETFs. One such ETF was the Fidelity High Yield Factor ETF (FDHY) that had a Trailing 12 Month Dividend Yield of 5.37%.
Sounds great right?
I then took a look at the ETF’s prospectus. FDHY’s high yield was due to the following:
“Using the ICE® BofA® BB-B US High Yield Constrained Index as a guide in structuring the fund and selecting its investments as it relates to credit quality distribution and risk characteristics…. investing at least 80% of assets in debt securities rated below investment grade (also referred to as high yield debt securities or junk bonds)“
FDHY Prospectus (12-30-2022)
In other words, FDHY’s high yield is due to investments in junk bonds vs companies that pay dividends.
At the end of the day, it’s important to not just look at a number on a screen and make a decision based on that number. Instead, we should understand how that number is being calculated.
With that being said, let’s now take a look at the details for the two Fidelity dividend ETFs.
1. Fidelity High Dividend ETF (FDVV)
FDVV is a passively managed ETF tracking the performance of the Fidelity High Dividend Index, which is “designed to reflect the performance of stocks of large and mid-capitalization high-dividend-paying companies that are expected to continue to pay and grow their dividends.”
FDVV is comprised of 121 individual stocks with the Top 10 FDVV holdings making up 30.82% of the entire index:
Below is the dividend payment history for FDVV:
2. Fidelity Dividend ETF for Rising Rates (FDRR)
FDRR is a passively managed ETF tracking the performance of the Fidelity Dividend Index for Rising Rates, which is “designed to reflect the performance of stocks of large and mid-capitalization dividend-paying companies that are expected to continue to pay and grow their dividends and have a positive correlation of returns to increasing 10-year U.S. Treasury yields.”
FDRR is comprised of 126 individual stocks with the Top 10 FDRR holdings making up 29.58% of the entire index:
Below is the dividend payment history for FDRR:
Final Thoughts
Fidelity does not currently offer any mutual fund options for their dividend-focused ETFs.
If mutual funds are more your style, it may be worth checking out Vanguard’s dividend-focused mutual funds.
Thank you for reading! 🙂
Full Disclosure: Nothing on this site should ever be considered advice, research or an invitation to buy or sell securities, please see my ‘Terms & Conditions’ page for a full disclaimer.
