2023 was a great year for stocks, with Big Tech in particular putting on quite a show. Chipmaker Advanced Micro Devices Inc. (ticker: AMD), cybersecurity firm Palo Alto Networks Inc. (PANW) and electric vehicle giant Tesla Inc. (TSLA) all more than doubled their stock price last year.
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But it’s important to remember the old stock market adage: Past performance is not a guarantee of future returns. Stock gains aren’t the only way to get ahead in 2024, and diversification beyond growth-oriented tech stocks may ultimately serve you well in the long run even if the near-term gains may not be as dramatic.
Dividend exchange-traded funds are a great example of rock-solid assets that can withstand the test of time. The following picks are among the seven best dividend ETFs to buy now:
| Dividend ETF | AUM | Expense Ratio | Trailing Dividend Yield* |
| Vanguard Dividend Appreciation ETF (VIG) | $74 billion | 0.06% | 1.9% |
| Vanguard High Dividend Yield Index ETF (VYM) | $51 billion | 0.06% | 3.1% |
| Schwab US Dividend Equity ETF (SCHD) | $52 billion | 0.06% | 3.5% |
| Global X SuperDividend ETF (SDIV) | $738 million | 0.58% | 12.2% |
| Vanguard Real Estate ETF (VNQ) | $32 billion | 0.12% | 4.2% |
| ProShares S&P 500 Aristocrats (NOBL) | $11.6 billion | 0.35% | 2.1% |
| iShares International Select Dividend ETF (IDV) | $4.2 billion | 0.51% | 6.6% |
*As of Feb. 20 close.
Vanguard Dividend Appreciation ETF (VIG)
Assets under management: $74 billion Expense ratio: 0.06%, or $6 per year on every $10,000 invested Dividend yield: 1.9%
The place to start if you’re looking for the best dividend ETFs is this leading Vanguard fund. The largest dividend ETF by assets, it is among the very cheapest funds in regards to its annual expenses too. Unlike some other dividend ETFs that pursue a high dividend yield at all costs, VIG focuses on companies that grow their dividends to provide a modest yield but a high-quality portfolio that is poised to grow payouts steadily over time. Currently, VIG holds roughly 300 top dividend stocks in the U.S., led by tech giants Microsoft Corp. (MSFT) and Apple Inc. (AAPL), insurance titan UnitedHealth Group Inc. (UNH) and consumer health care icon Johnson & Johnson (JNJ), among others.
Vanguard High Dividend Yield Index ETF (VYM)
Assets under management: $51 billion Expense ratio: 0.06% Dividend yield: 3.1%
If you want a big fund that is still cheap and focused on high-quality companies but you also want a bit more income than the prior dividend ETF, the Vanguard High Dividend Yield Index ETF is a good option. VYM offers an expanded portfolio of about 460 total stocks and focuses on companies with a history of paying higher-than-average yields. At the moment, top holdings include energy giant Exxon Mobil Corp. (XOM) and financial industry icon JPMorgan Chase & Co. (JPM). Some holdings aren’t quite as entrenched as the leaders in VIG, but all are still world-class blue-chip stocks all the same.
Schwab US Dividend Equity ETF (SCHD)
Assets under management: $52 billion Expense ratio: 0.06% Dividend yield: 3.5%
Another alternative for investors looking for a foundational dividend ETF is this selective Schwab fund, which only holds 100 total stocks at present. That allows it to edge its yield up to more than even the prior “high-yield” fund by focusing in on a smaller but more generous portfolio of companies. Right now, top holdings include chipmaker Broadcom Inc. (AVGO) and pharmaceutical giant AbbVie Inc. (ABBV). You’ll get a low expense ratio, massive assets under management and the most generous yield so far. But keep in mind the more targeted list of components also means elevated risk here for SCHD.
[READ: 10 Stocks That Have Doubled Their Dividends in 10 Years]
Global X SuperDividend ETF (SDIV)
Assets under management: $738 million Expense ratio: 0.58% Dividend yield: 12.2%
While some of the dividend ETFs on this list yield more than others, none have even been able to top the current payout of 10-year U.S. Treasury bonds, which yield about 4.2% at present and carry much less risk than stocks. Well, this “super-dividend” ETF nearly triples the yield of Treasurys by focusing on companies with big-time dividends. Of course, this means the fund is looking well beyond the usual blue-chip stocks, with more than 60% of the portfolio overseas and real estate making up more than 30% of its assets. The pursuit of higher rewards comes with much higher risk, but if you really want a high dividend yield then SDIV is worth a look.
Vanguard Real Estate ETF (VNQ)
Assets under management: $32 billion Expense ratio: 0.12% Dividend yield: 4.2%
If you don’t mind bias towards one particular grouping of companies, another way to get higher yield is to focus directly on the income-producing potential of real estate investments. The Vanguard Real Estate ETF is the largest and most popular way to do exactly that, offering one of the best dividend ETFs that is focused solely on real estate investment trusts, or REITs. If you’re unfamiliar with REITs, this unique class of publicly traded company must deliver 90% of taxable income back to shareholders, creating a constant mandate for big payouts. Currently, top holdings include industrial property and warehouse owner Prologis Inc. (PLD) and telecom infrastructure company American Tower Corp. (AMT), proving there’s income potential in real estate outside of shopping malls or apartments.
ProShares S&P 500 Aristocrats (NOBL)
Assets under management: $11.6 billion Expense ratio: 0.35% Dividend yield: 2.1%
Another tactical fund that veers away from the mainstream dividend ETFs is this ProShares offering that focuses on “Dividend Aristocrats” — an elite group of stocks in the S&P 500 that have increased their payouts for at least 25 consecutive years. That is an eternity on Wall Street, spanning not just the pandemic and war in Ukraine in the last few years, but also the global financial crisis of 2008 and even the dot-com boom and bust around the year 2000. This group is the gold standard for consistent dividend payments. However, keep in mind that the increases don’t have to be dramatic and can be as little as a penny per share per year. That’s part of the reason this fund’s yield is lower, even if the long-term growth potential in payout is significant.
iShares International Select Dividend ETF (IDV)
Assets under management: $4.2 billion Expense ratio: 0.51% Dividend yield: 6.6%
One final flavor of dividend ETF to consider is IDV, an income investment with an international focus. While overseas dividend stocks are often a bit harder to research and can pay less frequently than U.S. dividend stocks, perhaps issuing payouts once or twice per year, many multinational companies in developed markets outside the U.S. are in fact much more generous when it comes to profit sharing. That’s proven by the big yield of this iShares fund, thanks to holdings like $120 billion mega-miner Rio Tinto Group PLC (RIO), $70 billion consumer company British American Tobacco PLC (BTI) and Japanese shipping giant Nippon Yusen (OTC: NPNYY). If you were ever interested in diversifying your portfolio to include these more generous international stocks, IDV makes it easy to hold 100 top global dividend payers in a single simple ETF.
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7 Best Dividend ETFs to Buy Now originally appeared on usnews.com
Update 02/21/24: This story was previously published at an earlier date and has been updated with new information.
