Best Dividend ETFs of 2024 and Beyond
Best Dividend ETFs
- Vanguard High Dividend Yield ETF (VYM)
- Expense Ratio: 0.06%
- Total Assets: $51.5 billion
- Schwab U.S. Dividend Equity ETF (SCHD)
- Expense Ratio: 0.06%
- Total Assets: $52.7 billion
- WisdomTree U.S. LargeCap Dividend Fund (DLN)
- Expense Ratio: 0.28%
- Total Assets: $3.8 billion
- ProShares S&P 500 Dividend Aristocrats ETF (NOBL)
- Expense Ratio: 0.35%
- Total Assets: $11.7 billion
- iShares Core Dividend Growth ETF (DGRO)
- Expense Ratio: 0.08%
- Total Assets: $25.7 billion
- SPDR S&P Dividend ETF (SDY)
- Expense Ratio: 0.35%
- Total Assets: $20.4 billion
- WisdomTree U.S. Quality Dividend Growth Fund (DGRW)
- Expense Ratio: 0.28%
- Total Assets: $11.9 billion
Compare the Best Dividend ETFs
| ETF (TICKER) | CATEGORY | 10-YEAR ANNUALIZED RETURN (AS OF FEBRUARY 1) | EXPENSE RATIO |
|---|---|---|---|
| Vanguard High Dividend Yield ETF (VYM) | U.S. large value | 9.38% | 0.06% |
| Schwab US Dividend Equity ETF (SCHD) | U.S. large value | 11.03% | 0.06% |
| WisdomTree US LargeCap Dividend ETF (DLN) | U.S. large value | 10.01% | 0.28% |
| Proshares S&P 500 Dividend Aristocrats ETF (NOBL) | U.S. large value | N/A | 0.35% |
| iShares Core Dividend Growth ETF (DGRO) | U.S. large value | N/A | 0.08% |
| SPDR S&P Dividend ETF (SDY) | U.S. mid value | 9.41% | 0.35% |
| WisdomTree US Quality Dividend Growth Fund (DGRW) | U.S. large blend | 12.04% | 0.28% |
Final Verdict
Dividend ETFs can be an excellent core holding in an income-oriented investment portfolio. Compared with picking individual dividend stocks, a dividend ETF offers greater simplicity, accessibility, and diversification.
Investors should focus on their strategies, holdings, and expense ratios when comparing dividend ETFs instead of solely chasing yields. Understanding the difference between U.S. and international holdings, high yields versus dividend growth, and equity styles will help you find the right ETF.
Our recommendation for the best overall dividend ETF is the Schwab U.S. Dividend ETF (SCHD), thanks to a combination of a high Morningstar rating, rigorous index methodology, low expense ratio, competitive yields, and strong historical performance.
What is a Dividend ETF?
A dividend ETF is a fund that holds a portfolio of different dividend stocks based on a methodology. Like stocks, dividend ETFs trade on an exchange throughout the day and can be purchased via various brokerage services. Dividend ETFs can be actively or passively managed and hold U.S. or international dividend stocks.
Diving deeper, there are variations in the objectives of dividend ETFs. Some prioritize high yields, seeking to provide investors with a substantial, regular income. On the other hand, some ETFs emphasize dividend growth, focusing on companies with a history of steadily increasing their dividends over the years.
How to Invest in Dividend ETFs
Investing in dividend ETFs largely mirrors investing in any other ETF. The journey starts with opening a brokerage account. Once funded, you can search for the dividend ETF of your choice by entering its ticker symbol.
When ready to purchase, specify the number of shares and the type of order. Dividends can be distributed monthly, quarterly, semi-annually, or annually, depending on the ETF. Some brokerages may offer a dividend reinvestment plan (DRIP), automatically reinvesting your dividends to purchase more shares of the ETF.
Frequently Asked Questions (FAQs)
What should one look for in a dividend ETF? When considering what to look for in a dividend ETF, investors should go beyond assessing yields and also examine the ETF’s benchmark index, underlying holdings, expense ratio, historical volatility, and total assets.
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