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The introduction of high-yield dividend ETFs can be traced back to the mid-to-late 2000s, following the 2008 financial crisis. As traditional fixed-income investments like bonds became less appealing due to their low returns, investors sought alternatives that offered better income potential. The advent of passive investing through ETFs — known for their diversification and lower fees — made dividend-focused funds particularly attractive.
For instance, in 2010, Vanguard’s High Dividend Yield Index Fund had a yield of 3.1%, which, though not considerably high by today's standards, was still substantially better than the S&P 500's yield of 1.8%. With interest rates at near-zero, these investments offered a viable option for those seeking interest income.