Many investors are generally interested in dividend stocks. But if you took a group of these folks and asked them to explain their ideal investment in greater detail, chances are you’d find everyone has their own unique approach to long-term income investing.
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That’s because there’s no such thing as a dividend stock or a dividend ETF that is perfect for everyone. Some people prioritize stability and dividend growth over time, even if it means smaller current payouts. Others are looking for big paydays in the here and now, even if that means taking on a bit more risk to achieve that goal.
The following seven dividend ETFs all offer various approaches to provide income. Each is well established, and all offer bigger yield than the 1.5% you’ll find from the broad-based S&P 500 index right now. But every one of these dividend ETFs is also quite distinct, and represents a unique way to generate income via a single exchange-traded product.
| ETF | Assets Under Management | Expense Ratio | Trailing Dividend Yield* |
| Vanguard Dividend Appreciation ETF (ticker: VIG) | $78 billion | 0.06% | 1.8% |
| Schwab US Dividend Equity ETF (SCHD) | $55 billion | 0.06% | 3.4% |
| ProShares S&P 500 Aristocrats (NOBL) | $12 billion | 0.35% | 2.1% |
| First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) | $4.4 billion | 0.60% | 1.7% |
| iShares International Select Dividend ETF (IDV) | $4.3 billion | 0.51% | 6.2% |
| Global X SuperDividend ETF (SDIV) | $780 million | 0.58% | 10.9% |
| iShares Preferred & Income Securities ETF (PFF) | $14.4 billion | 0.46% | 6.3% |
*As of June 25.
Vanguard Dividend Appreciation ETF (VIG)
Assets under management: $78 billion Expense ratio: 0.06%, or $6 per year on every $10,000 invested Dividend yield: 1.8%
This leading Vanguard fund is the largest dividend-oriented fund by assets, and the logical place to start if you’re looking for cheap and diversified exposure to dividend stocks. Unfortunately, it’s not particularly generous from a yield perspective at just under 2% in annual payout — only slightly more than the 1.5% that is the average for the S&P 500 at present. That’s in part because the fund focuses on dividend appreciation instead of just raw payouts. For instance, tech giants Microsoft Corp. (MSFT) and Apple Inc. (AAPL) are among the top holdings, and while each has rapidly expanded its dividend payout over the last decade, they both provide current yields of less than 1%. There are more than 300 blue chips that make up this fund, and they all have a track record of income growth, however, so the stability and potential upside for future yield help make this one of the most popular dividend ETFs on Wall Street.
Schwab US Dividend Equity ETF (SCHD)
Assets under management: $55 billion Expense ratio: 0.06%, or $6 per year on every $10,000 invested Dividend yield: 3.4%
Though not as large as VIG from an asset perspective, this Schwab dividend fund is neck-and-neck for the biggest and best ETF out there. It’s tremendously well established, with enough assets to make it rank as one of the 30 largest U.S. ETFs of any kind. It’s also just as affordable, with the same rock-bottom expense ratio. But rather than prioritizing future yield through dividend appreciation, this Schwab dividend fund holds a targeted list of 100 large-cap dividend payers that offer big yields right now. Top holdings at present include chipmaker Texas Instruments Inc. (TXN) and pharmaceutical firm Amgen Inc. (AMGN).
ProShares S&P 500 Aristocrats (NOBL)
Assets under management: $12 billion Expense ratio: 0.35%, or $35 per year on every $10,000 invested Dividend yield: 2.1%
If you’re serious about dividend growth, then one of the best dividend ETFs to consider is this ProShares offering that focuses on the S&P 500’s “Dividend Aristocrats.” If you’re unfamiliar with that moniker, it describes an elite group of stocks that have increased their payouts for at least 25 consecutive years. That’s a long time that spans multiple market disruptions. For instance, the current list of Dividend Aristocrats had to continue to increase their distributions across not only the COVID-19 pandemic, but also the global financial crisis of 2008 and even the dot-com bubble of 2000. While the big VIG fund from Vanguard biases itself toward companies with just a few years of increases under their belt, this list of just under 70 stocks like logistics firm C.H. Robinson Worldwide Inc. (CHRW) and industrial giant Air Products & Chemicals Inc. (APD) is much more selective.
First Trust SMID Cap Rising Dividend Achievers ETF (SDVY)
Assets under management: $4.4 billion Expense ratio: 0.6%, or $60 per year on every $10,000 invested Dividend yield: 1.7%
Swinging back toward dividend stocks that are a bit more “growthy,” this unique First Trust offering focuses on small and midcap stocks that are thriving — and thus increasing in both size and in dividend payments. SDVY is obviously a bit riskier as a result, as the deep-pocketed blue chips you know and love won’t be represented. However, stocks like oil-and-gas firm Texas Pacific Land Corp. (TPL) or semiconductor-services firm Amkor Technology Inc. (AMKR) fly under the radar but have the potential to offer both dividends and share appreciation. The yield is on the lower side, but this SMID-focused fund is a great opportunity to look beyond sleepy large companies to tap into smaller firms that could be more dynamic.
[read: 7 of the Best 5-Star ETFs to Buy]
iShares International Select Dividend ETF (IDV)
Assets under management: $4.3 billion Expense ratio: 0.51%, or $51 per year on every $10,000 invested Dividend yield: 6.2%
International companies are a good way to tap into tremendous yield outside of your conventional core holdings. Large companies headquartered abroad also tend to be more value-oriented, as opposed to the dominance of growth-oriented Silicon Valley stocks in the U.S. that often skews domestic indexes toward the tech sector. IDV is the leading international dividend stock ETF with a portfolio of global leaders that includes mega-miner Rio Tinto PLC (RIO), French energy giant TotalEnergies SE (TTE), and U.K.-based British American Tobacco PLC (BTI). Similar to U.S. blue chips, these are well-established firms even if they’re less familiar, and they offer stable and generous dividends. With zero assets in domestic stocks, you can add diversification and yield easily without duplicating positions in your portfolio should you invest in this iShares dividend fund.
Global X SuperDividend ETF (SDIV)
Assets under management: $780 million Expense ratio: 0.58%, or $58 per year on every $10,000 invested Dividend yield: 10.9%
Offering the biggest payday of this group is SDIV, which looks to cover all corners of the market that provide above-average yield. That includes international stocks in more aggressive parts of the world like China and Hong Kong, which respectively represent the No. 2 and No. 3 regions in this fund right now. You’ll also see a big bent toward real estate, which is more than a third of total assets. These factors make SDIV a bit more risky than what you’ll find in the larger and more traditional dividend stock ETFs, but it’s hard to argue with a double-digit yield. And like the aforementioned international fund, the smaller and more dividend-focused stocks in this fund are not commonly going to appear in the more popular core holdings most investors already have in their portfolio.
iShares Preferred & Income Securities ETF (PFF)
Assets under management: $14.4 billion Expense ratio: 0.46%, or $46 per year on every $10,000 invested Dividend yield: 6.3%
Preferred stock is a kind of hybrid between stocks and bonds, offering the stability and bigger income potential of conventional bond offerings of corporate debt but also a bit more risk and volatility in share prices, as preferred shareholders are fundamentally not given the same priority as bondholders during financial disruptions. PFF holds more than 430 different forms of preferred stock, mainly from banks like JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C). The financial sector represents about 75% of all assets at present, so you’re taking on some risk by leaning into this corner of the market. But considering preferred shares regularly offer twice the yield of common stock, this can be an effective way to drive long-term income via a dividend stock ETF that depends on a slightly different asset than traditional blue chips.
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7 Best Dividend ETFs to Buy Now originally appeared on usnews.com
Update 06/26/24: This story was previously published at an earlier date and has been updated with new information.
