LQD is a bond ETF issued by iShares in the U.S., with the full name "iShares iBoxx $ Investment Grade Corporate Bond ETF" and ticker symbol LQD. This ETF specifically invests in U.S. corporate bonds with investment-grade credit ratings (BBB or higher), tracking the Markit iBoxx USD Liquid Investment Grade Index.
Key Features of LQD ETF
- ETF Name: iShares iBoxx Investment Grade Corporate Bond ETF
- Ticker Symbol: LQD
- Issuer: iShares (BlackRock)
- Listing Exchange: NYSE
- Inception Date: July 22, 2002 (23 years established)
- Currency: USD
- ETF Size: $30,823.83 million (as of May 30, 2025)
- Dividend Frequency: Monthly
- Yield: 4.44% (as of June 13)
- Management Fee: 0.14%
- Investment Style: Corporate bonds
LQD Composition and Credit Rating Distribution
LQD tracks the iBoxx USD Investment Grade Corporate Bond Index, which includes bonds from various industries, primarily financial and large corporations, offering diversification.
Credit Rating Structure (Primarily A-Rated)
- A-Rated Bonds: 47.27%
- BBB-Rated Bonds: 43.26%
- Overall: Investment-grade bonds (BBB or higher)
Industry Distribution
- Banking: 25%
- Consumer Goods & Technology: Significant portions
- Other Industries: Communications, Energy, Consumer Products
Top 10 Holdings
LQD's top holdings include large, financially stable U.S. corporations, primarily in finance and technology, ensuring liquidity and stable cash flow.
LQD ETF Yield
- Dividend Frequency: Monthly
- Past 12-Month Dividends: ~$3.80–4.20 per share
- Yield Range: 3–4.5%
Tax Rules for LQD ETF Dividends
- Withholding Tax: 30% for non-U.S. residents (e.g., Taiwanese investors)
- Capital Gains: Tax-free in the U.S. but subject to Taiwan's overseas income tax if exceeding NT$1 million.
LQD vs. TLT Comparison
| Metric | LQD | TLT |
|---|---|---|
| Investment | Investment-grade corporate bonds | U.S. long-term Treasury bonds |
| Duration | 9–10 years | ~20 years |
| Credit Risk | Moderate (corporate) | Minimal (U.S. government) |
| Yield | 4.2–4.4% | 3.6–4.4% |
| Volatility | Lower | Higher |
Performance Insights
- LQD: Higher cash flow, moderate credit risk.
- TLT: Sensitive to interest rates, suitable for capital gains during rate declines.
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FAQs
1. What is LQD ETF best suited for?
LQD is ideal for investors seeking stable monthly income with moderate risk tolerance, focusing on investment-grade corporate bonds.
2. How often does LQD pay dividends?
LQD pays dividends monthly.
3. Are LQD dividends taxable?
Yes, non-U.S. residents face a 30% withholding tax on dividends.
4. How does LQD compare to TLT?
LQD offers higher yields with corporate credit risk, while TLT is safer but more volatile due to long duration.
5. Can I avoid the 30% dividend tax?
No, but capital gains from price appreciation are tax-free in the U.S.
6. What industries dominate LQD’s holdings?
Banking (25%), followed by consumer goods, technology, and communications.
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Conclusion
LQD ETF stands out for its monthly dividends, investment-grade bond focus, and balanced risk-reward profile. It’s a compelling choice for income-focused investors willing to accept moderate credit risk. For those prioritizing safety, TLT may be preferable, albeit with higher volatility.
Disclaimer: This content is for informational purposes only and does not constitute investment advice.