Generating passive income is a dream for many people. The idea of money working for you while you sit back and relax is certainly appealing. However, the reality is that money doesn’t just jump into your pocket. You usually have to work for it in some way. Once you have some money saved up, though, you can make it work for you by investing in assets that generate passive income. This is the key to building wealth over time without having to actively work for every dollar you earn.
There are various ways to generate passive income, but not all methods are created equal. Some strategies may only work well for a short period, while others are more suitable for the long term. If you’re looking to build decades of passive income, one solid option is to invest in an exchange-traded fund (ETF) that you can buy and hold forever.
One ETF that stands out for income investors is the Vanguard Utilities ETF (NYSEMKT: VPU). Managed by Vanguard, this fund focuses on utility stocks, which are known for their stable dividends and relatively low volatility. The Vanguard Utilities ETF has a 30-day SEC yield of 3.27%, which is a solid return for income-focused investors. Additionally, the fund has delivered an average annual return of over 9% since its inception in 2004, making it a reliable source of passive income.
One of the key advantages of the Vanguard Utilities ETF is its low costs. With an annual expense ratio of only 0.1%, well below the industry average, investors can keep more of their returns without sacrificing quality. The fund also has a low beta compared to the broader market, indicating lower historical volatility, which is attractive to investors seeking steady income.
The Vanguard Utilities ETF is a diversified fund that holds 66 stocks, with a focus on electric utilities. The top holdings include companies like NextEra Energy, Southern Company, and Duke Energy, which are well-established players in the utility sector. These companies have a track record of stable earnings and dividends, making them reliable sources of passive income for investors.
While the Vanguard Utilities ETF has delivered moderate growth over the years, it may not match the total returns of the broader market. However, for investors looking for reliable income and low volatility, this trade-off could be worth it in the long run. By investing in this ETF and holding it for the long term, investors can build a steady stream of passive income that can last for decades.
In conclusion, if you’re looking to build passive income for the long term, investing in the Vanguard Utilities ETF could be a smart move. With its focus on stable utility stocks, low costs, and reliable dividends, this fund offers a solid option for income investors. By holding this ETF for the long term, investors can build a source of passive income that can provide financial security for years to come.
