“Stocks go up” isn’t the only way to get ahead in the market, which is fortunate, because stocks don’t always go up.
A focus on dividend stocks can help you generate another type of return by sharing directly in the profits of a company via regular payouts to your investment account. These dividends are great to have in good times when stocks are heading higher … but even better to have as a source of returns when stocks are up against the ropes.
Importantly, you don’t necessarily have to pick individual winners—you can buy diversified bundles of these stocks via dividend exchange-traded funds (ETFs).
Today, I’m going to help you dive into some of the best dividend ETFs you can buy. I’ll give you a quick primer on dividend stocks, discuss why you might want to buy dividend funds to get exposure to these stocks, and list what I believe are some of the best dividend ETFs you can own right now.
Disclaimer: This article does not constitute individualized investment advice. Securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.
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What Is a Dividend Stock?
A dividend is a cash payment from a company to shareholders. Companies that regularly provide these cash payments are referred to as dividend stocks.
Often, investors favor dividend stocks because, to regularly pay out those dividends, they have to generate consistent and significant profits—a good sign that the company is financially healthy and well-managed.
Why Invest in Dividend Stocks via ETFs?
As a group, dividend stocks are pretty common, but they’re not created equally. Some companies only pay nominal dividends that are just a penny or two per share, with no prospect for dividend growth anytime soon. Others may offer generous but unsustainable dividend payouts that might be eliminated altogether in the future.
That’s why exchange-traded funds are a good alternative to individual dividend stocks. ETFs spread your money around, rather than force you to rely on one company’s specific strengths and weaknesses.
And finding the best stocks capable of consistently paying dividends and enjoying significant future dividend growth can be a daunting task, even for seasoned investors. So instead, why not try to gain exposure to dividend-paying stocks via a single, diversified holding that’s tasked with finding great companies for you?
That’s what the best dividend ETFs have to offer.
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A Note About Dividend Yields
A term you’re going to want to familiarize yourself with is dividend yield.
A dividend yield tells you how much of your investment you can expect to get back in the form of dividends. A stock’s dividend yield, for instance, is calculated on an annualized basis, and expressed as a percentage of share price. Example: If a stock trades for $200 and pays $1 per quarter, that’s $4.00 in annual payouts—or 2.0% of the share price. So its dividend yield is 2.0%. Pretty easy.
But a fund’s dividend yield is calculated a little differently. It’s much more difficult to estimate future payouts for an ETF or mutual fund because they own groups of many different stocks paying on changing cycles.
The fairest way to measure yield in dividend ETFs and mutual funds is to calculate the distributions over the last calendar year. Dividends might change for these funds going forward, but a trailing 12-month look is the most faithful way to calculate yield.
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Our Favorite Dividend ETFs
Like with any investment, what constitutes the best ETFs for the yield-minded depends on the individual’s personal goals. There are many ways to invest for dividend income; the following list of options should provide something that fits in most portfolios.
Our best dividend ETFs are listed by yield, from smallest to largest.
Best Dividend ETF #1: Vanguard Dividend Appreciation ETF
- Assets under management: $97.9 billion*
- Dividend yield: 1.6%
- Expense ratio: 0.05%, or 50¢ per year on every $1,000 invested
The first few ETFs I’ll focus on probably won’t impress you with their current dividend yields, but they nonetheless warrant a serious once-over.
For instance, despite its sub-2% yield, the Vanguard Dividend Appreciation ETF (VIG) is the market’s largest dividend ETF by assets. While most dividend ETFs are attractive because of their current yields, VIG prioritizes dividend growth—so a low yield now, over time, should blossom into a higher yield on cost the longer you hold.
But dividend growth isn’t just about reaping more cash over time; it’s also a sign of corporate-financial quality. If a company can regularly raise the level of cash distributions it makes to its shareholders, especially over the course of many years, that’s a strong statement about its financial durability through thick and thin.
This Vanguard index fund is benchmarked to the S&P U.S. Dividend Growers Index, which holds stocks that have consistently improved their payouts every year for at least 10 consecutive years. (Interestingly, the index excludes the 25% highest-yielding companies that would be eligible to be in the index.)
Currently, VIG holds nearly 340 top dividend stocks in the U.S., led by tech giants Broadcom (AVGO) and Microsoft (MSFT), mega-bank JPMorgan Chase (JPM), and Big Pharma name Eli Lilly (LLY). It’s also weighted by size, which means the bigger the stock, the more influence it has on the portfolio. For instance, this fund’s top five companies command more than 20% of the portfolio’s assets!
Vanguard Dividend Appreciation holds stable, decent-paying stocks, and it provides access to those stocks for one of the lowest annual expense ratios among dividend ETFs. It just doesn’t pay a high yield right now.
* Vanguard fund assets are spread across multiple share classes, including mutual funds and ETFs alike. Assets listed for each Vanguard ETF in this story are for the ETF share class only.
Want to learn more about VIG? Check out the Vanguard provider site.
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Best Dividend ETF #2: Vanguard Small-Cap Value ETF
- Assets under management: $31.4 billion
- Dividend yield: 2.0%
- Expense ratio: 0.07%, or 70¢ per year on every $1,000 invested
Our next dividend ETF, the Vanguard Small-Cap Value ETF (VBR), teaches us a couple basic but important lessons about dividend funds. For one, dividend ETFs often own larger companies, but they don’t necessarily have to. And also, many good sources of dividends come from products that don’t explicitly say “dividends” or “income” in the fund name.
Small caps are commonly defined as being between $500 million to $2 billion in market cap. But many indexes, such as the one VBR tracks (the CRSP US Small Cap Value Index), instead define it as a range of some investable universe by percentage. For instance, the CRSP index represents companies between the bottom 85% to 98% of the CRSP US Total Market Index, which explains why the fund holds many companies worth tens of billions of dollars, as well as some companies that are smaller than $500 million.
VBR’s index takes that universe of small caps and invests in those that pass muster based on valuation metrics such as future earnings-to-price ratio, historical earnings-to-price ratio, book-to-price ratio, sales-to-price ratio, and dividend-to-price ratio. (“But Kyle,” you ask. “I always learned that it was price-to-earnings [P/E], price-to-sales [P/S], and so on.” I know, reader, I know. But I don’t know what to tell you. CRSP is a rebel without a cause.)
The resulting portfolio of around 840 stocks is currently heaviest in industrial-sector stocks, financial companies, and consumer discretionary firms.
Many people associate dividends with larger, more mature firms that aren’t investing as much in growth anymore, but many smaller companies prioritize dividends, too. That said, every dollar paid out as dividends is a dollar not being reinvested in growth, which is why dividend payers are more frequently also value stocks (growth and value are frequently, but not always, opposite sides of the same coin). As a for-instance? VBR pays 2%, which is nearly twice what the blue-chip S&P 500 pays. Its sister fund, Vanguard Small-Cap Growth ETF (VBK), pays just 0.6%.
As for performance? VBR has beaten the average for its category (small-cap value stocks) in every significant trailing time period.
Want to learn more about VBR? Check out the Vanguard provider site.
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Best Dividend ETF #3: iShares Core Dividend Growth ETF
- Assets under management: $35.1 billion
- Dividend yield: 2.0%
- Expense ratio: 0.08%, or 80¢ per year on every $1,000 invested
The iShares Core Dividend Growth ETF (DGRO) is another well-established and cost-effective dividend ETF. And like VIG, it is committed to dividend growth rather than dividend yield.
To be included in DGRO, companies must pay a qualified dividend, boast at least five years of uninterrupted annual dividend growth, and have an earnings payout ratio of less than 75%. (This last number means a company can spend no more than 75% of its profits to pay its dividends.) It also has another filter similar to VIG in that, prior to screening its available universe of stocks for dividend growth and payout ratio, it excludes the top 10% of dividend yields.
Put more succinctly: DGRO tries to hold dividend growers that aren’t falling apart nor stretching to afford their distributions.
About 400 stocks make the cut, with the typical mega-cap names at the top of the list. That includes tech stocks like Apple (AAPL) that might not have particularly generous yields right now, but that are likely to bolster their payouts in the years to come, but also some more bountiful dividend growers like Johnson & Johnson (JNJ).
This ETF also doesn’t have a sky-high current dividend yield. However, investors who plan to buy and hold for many years could see the income payments grow significantly over time.
Want to learn more about DGRO? Check out the iShares provider site.
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Best Dividend ETF #4: ProShares S&P 500 Aristocrats ETF
- Assets under management: $11.4 billion
- Dividend yield: 2.1%
- Expense ratio: 0.35%, or $3.50 per year on every $1,000 invested
Of course, there’s dividend growth, and there’s dividend growth. The ProShares S&P 500 Aristocrats ETF (NOBL) clearly falls into the latter.
This dividend ETF invests in the S&P 500 Dividend Aristocrats, which are an elite group of stocks that have upped the ante on their payouts for at least 25 consecutive years. How long is 25 years? That covers not just COVID and the 2020s’ pair of bear markets, but also the Global Financial Crisis of 2008 … and even the dot-com boom and bust in 1999-2000!
More impressive still? NOBL holds stocks that have raised their dividends for even longer periods of time, including a number of Dividend Kings that have hit the half-century mark.
“From an evergreen standpoint, companies that consistently grow their dividends are demonstrating quality,” says Simeon Hyman, global investment strategist at ProShares. “You can’t manufacture a dividend out of thin air. These companies have to be generating consistent earnings, consistent cash flow, have appropriate levels of leverage … and that comes through in spades. If you look at the Aristocrats, you’ll see things like better return on assets (RoA) compared to the S&P 500, and a whole host of other measures.”
In other words … the kinds of companies that have already proven many times that they can survive economic and market tumult.
This Dividend Aristocrats ETF has a tight portfolio of just about 70 holdings. And like with other dividend ETFs that mostly focus on payout growth, NOBL doesn’t offer a very large payday. Still, if you want to prioritize stability and consistency in your dividend payments, this fund is worth a look.
Want to learn more about NOBL? Check out the ProShares provider site.
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Best Dividend ETF #5: Utilities Select Sector SPDR Fund
- Assets under management: $23.2 billion
- Dividend yield: 2.7%
- Expense ratio: 0.08%, or 80¢ per year on every $1,000 invested
If you’re more concerned about high current yield rather than dividend growth, the rest of the funds on my list will be more to your taste.
Utility stocks’ appeal usually comes from their defensive nature. Even in the worst economic environments, Americans will cut down on virtually every other expenditure before they’d let their power go out or have their faucets run dry. That means pretty stable demand for utility companies, who aren’t usually a fount of growth, but are typically allowed to raise rates little by little over the years, and generally pay generous and rising dividends to boot.
However, of late, utilities have been juiced by a new growth driver: data centers and artificial intelligence. “Goldman Sachs Research forecasts global power demand from data centers will increase 50% by 2027 and by as much as 165% by the end of the decade (compared with 2023),” writes James Schneider, a senior equity research analyst covering U.S. telecom, digital infrastructure, and IT services.
The best way to get this exposure is an oldie but a goodie: the Utilities Select Sector SPDR Fund (XLU). The XLU is an index fund that holds all utility-sector stocks in the S&P 500, which includes electric, gas, and water utilities; multi-utilities; and independent power and renewable electricity producers. Right now, that’s a 31-stock list that includes NextEra Energy (NEE), Southern Co. (SO), and Constellation Energy (CEG).
Naturally, if you buy a sector ETF, you run the risk of the entire fund’s portfolio struggling if the sector itself falls on hard times. But in XLU, there’s also some significant single-stock risk—the aforementioned names account for more than a quarter of XLU’s weight, including almost 13% for NEE alone.
But you’re also receiving a bit of compensation in the form of above-average dividends. Utilities tend to be one of the highest-yielding sectors, and right now, SPDR’s utility ETF doles out more than twice the yield of the S&P 500.
Want to learn more about XLU? Check out the State Street Investment Management provider site.
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Best Dividend ETF #6: Schwab U.S. Dividend Equity ETF
- Assets under management: $70.2 billion
- Dividend yield: 3.8%
- Expense ratio: 0.06%, or 60¢ per year on every $1,000 invested
You might not want to put all of your chips into one sector. That’s OK—you can still get an above-average level of yield across several market sectors with high-yield dividend ETFs like the Schwab U.S. Dividend Equity ETF (SCHD).
While SCHD doesn’t explicitly target dividend growth, that doesn’t mean it’s throwing quality out the window. To be included in the fund’s tracking index, the Dow Jones U.S. Dividend 100, a company must have 10 consecutive years of dividend payments, have a float-adjusted market capitalization of at least $500 million, and meet minimum liquidity criteria. The index then selects stocks based on four metrics:
- Cash flow to total debt
- Return on equity
- Dividend yield
- Five-year growth rate
SCHD implements a few other controls to prevent excessive single-stock and even single-sector risk, including a modified market-cap weighting, a 4% weighting cap on individual stocks, and a 25% weighting cap on sectors. The index rebalanced quarterly to keep those portfolio caps tight, and its holdings are reviewed once a year.
The result is a basket of over 100 large-caps with pretty decent yields, including the likes of AbbVie (ABBV), PepsiCo (PEP) and Chevron (CVX). At the moment, the portfolio is heaviest in energy (19%), consumer staples (19%), and health care (16%)—historically dividend-friendly sectors.
Costs are about as low as you could want, too, at just 0.06%, making SCHD one of the cheapest high-dividend ETFs on offer.
Want to learn more about SCHD? Check out the Schwab provider site.
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Best Dividend ETF #7: Vanguard Real Estate ETF
- Assets under management: $34.5 billion
- Dividend yield: 3.9%
- Expense ratio: 0.13%, or $1.30 per year on every $1,000 invested
One of the best income-producing corners of the markets is real estate, and to tap the potential of properties, we’ll want one of the most popular Vanguard ETFs: the Vanguard Real Estate ETF (VNQ).
As the name implies, this dividend ETF is focused solely on real estate investment trusts (REITs) and related investments. So, the companies in this fund own all sorts of real estate—from office buildings and apartments to hotels and even driving ranges. Currently, top holdings include health care real estate giant Welltower (WELL), industrial property and warehouse owner Prologis (PLD), and telecom infrastructure company American Tower (AMT). Interestingly, the ETF’s largest allocation is to the Institutional Plus shares of the Vanguard Real Estate II Index Fund, which is itself a basket of REITs that’s extremely similar to VNQ.
REITs are required to pay out at least 90% of their profits to shareholders, which they do in exchange for favorable tax treatment. As a result, real estate tends to be one of the highest-yielding sectors; VNQ’s nearly 4% yield is more than triple that of the S&P 500.
And like with XLU, keep in mind that while this dividend ETF is highly diversified, at about 155 REITs, these businesses are in many ways interrelated. That means putting your money into this fund exposes you to any volatility from the real estate industry.
Want to learn more about VNQ? Check out the Vanguard provider site.
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Best Dividend ETF #8: SPDR S&P Emerging Markets Dividend ETF
- Assets under management: $913.6 million
- Dividend yield: 4.5%
- Expense ratio: 0.49%, or $4.90 per year on every $1,000 invested
International investments are typically split into two categories: 1.) Developed markets (DMs), which are slower-growing but more established economies with highly regulated markets, little if any state ownership of businesses, and other trappings you’d expect from stable nations; and 2.) emerging markets (EMs), which are faster-growing but less established economies that may have less transparent markets, more state-owned companies, geopolitical unrest, and other characteristics you’d expect out of developing but less secure nations.
Investors generally look to developed markets for income and security, and emerging markets for growth. But that doesn’t mean EMs can’t deliver generous dividends.
The SPDR S&P Emerging Markets Dividend ETF (EDIV) is a collection of the 100 emerging-market stocks with the highest risk-adjusted yields after meeting certain requirements, such as being profitable (by adjusted earnings per share) and paying stable or increasing dividends over a three-year period. Rather than by size, stocks are weighted based on their trailing 12-month dividend yield. But no stock can be weighted at greater than 3%, and no single country nor sector can be weighted at more than 25%.
Financials, which often feature prominently in EM funds, are the top weight at more than 30% of assets. Communication services and consumer staples enjoy double-digit weights, too. Meanwhile, the fund is heaviest in Taiwanese stocks (23%), with the rest scattered among roughly 15 other countries, including South Africa, Thailand, and Malaysia. China is decently represented at just 8% of assets, but that represents a swift demotion from more than 20% just a few months prior.
Top holdings are quite different than your average emerging-market ETF, too. Right now, they include Thailand’s PTT Public Company Limited, Brazilian brewer Ambev (ABEV), and Saudi Telecom.
These companies fuel a generous 4%-plus dividend. But you should understand how you’re getting that dividend. Most ETFs’ distributions vary from one quarter to the next, but EDIV’s are particularly “lumpy.” Its four most recent dividends were 65.9¢, 63.7¢, 28.7¢, and 16.7¢.
Want to learn more about EDIV? Check out the State Street Investment Management provider site.
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Best Dividend ETF #9: iShares International Select Dividend ETF
- Assets under management: $6.1 billion
- Dividend yield: 4.8%
- Expense ratio: 0.50%, or $5.00 per year on every $1,000 invested
EDIV isn’t an outlier. In general, if you want a yield of 4% or more, it’s difficult to find that in dividend ETFs without looking overseas. Indeed, most of the highest-yielding equity ETFs are either international or global (U.S. plus international).
International dividend stocks are a slightly different animal. They often pay less frequently than U.S. dividend stocks—maybe once or twice a year instead of each quarter. Their payouts typically fluctuate more based on seasonal profitability of the companies as well as currency exchange rates. They’re taxed differently, too. But as you can see by the yield of both EDIV and the iShares International Select Dividend ETF (IDV), international stocks tend to be more generous as a group.
This roughly 100-stock dividend ETF’s portfolio includes the world’s largest and most established firms. This includes $135 billion French utility giant TotalEnergies (TTE) and $115 billion consumer company British American Tobacco (BTI). The U.K. is the most heavily weighted country at 20% of assets; Italy, France, Spain and Germany are among other countries with prominent weightings in this ETF.
If you yearn for higher yield and want to diversify your portfolio to include international equities, IDV does the trick. In 2025, this has been a winning formula, as international developed markets have performed far better than U.S. stocks.
Want to learn more about IDV? Check out the iShares provider site.
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Best Dividend ETF #10: Global X SuperDividend ETF
- Assets under management: $1.0 billion
- Dividend yield: 9.7%
- Expense ratio: 0.58%, or $5.80 per year on every $1,000 invested
“No no,” you say. “Where are the really high yields?”
OK. You asked for it.
The Global X SuperDividend ETF (SDIV) prioritizes yield above all else, generating a current payout of 10% that’s literally eight times that of the S&P 500, and well more than double the 10-year Treasury yield.
Global X’s fund definitely does not look like most other dividend ETFs.
This is a global fund made up of 100 of the world’s highest-yielding securities. But unlike many global funds, which tend to weight the U.S. at 50% or more, America accounts for only about quarter of assets. Other countries fill that vacuum, including Brazil (15%), Hong Kong (12%), and the U.K. (11%). Also, SDIV is extremely tilted toward just a handful of sectors—financials (28%), energy (22%), real estate (14%), and materials (11%) represent three-quarters of the fund’s assets.
I hope it goes without saying that the much higher rewards come with much higher risk. SDIV really is all about high dividend yield—but quality simply isn’t as important. The index’s only real quality check is a periodic review for dividend stability. (Global X gives this example: “no official announcement as of the Selection Day that dividend payments will be canceled or significantly reduced in the future.”)
In other words: SDIV is good for aggressive investors who want high income. But people looking for stability might want to search elsewhere.
Want to learn more about SDIV? Check out the Global X provider site.
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Frequently Asked Questions (FAQs)
How do dividend ETFs pay investors?
When you own an ETF, you own parts of shares of various dividend stocks with different payout schedules. However, you don’t get paid when those stocks pay out—you get paid based on the ETF’s payout schedule.
Dividend ETFs pay their investors the same way as dividend stocks do, with deposits appearing on your brokerage statement on a regular cycle. Some funds—like the Global X SuperDividend ETF (SDIV)—pay you on a monthly cycle. But the majority, including the other six dividend ETFs on this list, all pay on a quarterly schedule, which is similar to most U.S. dividend stocks.
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