This $500 Dividend Index Fund Is a No-Brainer Buy in August 2025
Wall Street's latest open secret? A dirt-cheap index fund quietly printing dividends while traditional finance struggles to match 4% yields.
The Set-It-and-Forget-It Play
For less than the cost of a used MacBook, this fund bundles recession-proof utilities, cash-gushing telecoms, and energy giants—no stock-picking voodoo required.
Why Now?
With bond markets pricing in rate cuts by Q4, dividend stocks are staging a 2021-level comeback. The kicker? This fund’s 0.05% expense ratio laughs at your advisor’s 1% AUM fee.
The Catch
Returns won’t moon like crypto—but neither will your blood pressure. Perfect for investors who prefer compound growth over deciphering Powell’s Jackson Hole speeches.
Image source: Getty Images.
The case for dividends
Before getting to the Fidelity High Dividend ETF, it's good to appreciate just how powerful dividend investing can be. The table below, offering data from a Hartford Funds report, should make it clear.
|
Dividend growers and initiators |
10.24% |
|
Dividend payers |
9.20% |
|
No change in dividend policy |
6.75% |
|
Dividend non-payers |
4.31% |
|
Dividend shrinkers and eliminators |
(0.89%) |
|
Equal-weighted S&P 500 index |
7.65% |
Data source: Ned Davis Research and Hartford Funds.
The data shouldn't really be that surprising, though. A company will typically need to grow to a certain size, with sufficiently reliable income, before it will commit to paying a regular dividend. Healthy and growing dividend payers are also most likely to increase their payouts over time.
Meet the Fidelity High Dividend ETF
The Fidelity High Dividend ETF has a lot to offer investors. For starters, there's its solid performance. The table below compares it to a classic, low-fee S&P 500 index fund.
|
Fidelity High Dividend ETF |
3.1% |
15.41% |
17.90% |
|
Vanguard S&P 500 ETF (VOO) |
1.2% |
16.53% |
15.45% |
Data source: Morningstar.com, as of Aug. 1, 2025.
Those returns are quite close to those of the S&P 500, and in some periods, they outpace the S&P 500. The Fidelity ETF's dividend yield is also more than twice that of the S&P 500.
Then there are fees. As with many great ETFs, the Fidelity High Dividend ETF sports a very low expense ratio (annual fee) of just 0.16%, which means you'll have to cough up $1.60 annually for each $1,000 you've got invested in the fund. You can probably swing that.
What's in the Fidelity High Dividend ETF?
So what, exactly, is the Fidelity High Dividend ETF invested in? It tracks the, aiming to invest at least 80% of its assets in the same ones in the index. The index excludes non-dividend payers and is focused on large and mid-sized companies that are expected to keep paying -- and growing -- their dividends.
The Fidelity High Dividend ETF recently encompassed 123 holdings, and its top 10 holdings made up about 33% of its total value. Here are those recent top 10 stocks:
|
Nvidia |
0.02% |
6.06% |
|
Microsoft |
0.63% |
5.78% |
|
Apple |
0.51% |
4.75% |
|
JPMorgan Chase |
1.94% |
2.76% |
|
Broadcom |
0.82% |
2.58% |
|
Philip Morris International |
3.31% |
2.45% |
|
Visa |
0.70% |
2.35% |
|
ABN AMRO Bank N.V. |
5.30% |
2.13% |
|
Coca-Cola |
3.00% |
2.06% |
|
ExxonMobil |
3.61% |
2.00% |
Data source: Fidelity.com, as of June 30, 2025.
A glance at these top holdings provides a clue regarding how the fund can roughly keep up with the S&P 500 while paying more in dividends: It invests significantly in both fast-growing high-tech stocks (such as Nvidia and Broadcom) and blue chip dividend payers (such as JPMorgan Chase and ExxonMobil). It encompasses about a quarter as many stocks as the S&P 500, so it can devote a larger percentage of its assets to each one, too.
On top of that, the ETF's portfolio is mostly a value-oriented one, as opposed to one that seeks growth stocks.
The Fidelity High Dividend ETF's price per share was recently about $54, so with an initial investment of just $500, you could get nine shares. Ideally, as long as your confidence in the ETF remains intact, you'll add money to your position over time, boosting your long-term growth.
