6 Best Dividend ETFs To Watch or Invest In Right Now
Written by
Rudri Patel
Edited by
Elizabeth Constantineau
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Divided stocks have long been a favorite for retirees, offering steady income without the need to sell shares — but betting on individual stocks can be risky. The rise of high-dividend ETFs gave retirees and all investors a way to earn income while spreading out risk.
Here’s a look at some of the best dividend ETFs and how to choose the right one for you.
6 Best Dividend ETFs for 2025
Curious how the best dividend ETFs compare? Take a look at this chart to determine what investment works best for you:
| ETF | Ticker | Assets Under Management | Expense Ratio | Dividend Yield | Key Strength |
|---|---|---|---|---|---|
| Vanguard High Dividend Yield ETF | VYM | $73.3 billion | 0.06% | 2.86% | -Holdings include Broadcom, JP Morgan Chase & Co., Procter & Gamble. -Seeks high-yield dividend-paying companies. |
| Schwab U.S. Dividend Equity ETF | SCHD | $66.4 billion | 0.06% | 3.72% | -Holdings include Coca-Cola, Verizon, ConocoPhillips. -Focus is on high-quality U.S. companies with strong dividend histories. |
| Vanguard Dividend Appreciation ETF | VIG | $102.4 billion | 0.05% | 1.83% | -Holdings include Apple, Microsoft, Eli Lily & Co. -Fund focuses on companies that have increased their dividend over the last decade. |
| ProShares S&P 500 Dividend Aristocrats ETF | NOBL | $11.77 billion | 0.35% | 2.08% | -Top holdings include Coca-Cola, Consolidated Edison. -Focus is on companies that have a history of increasing dividends over the last 25 years. |
| iShares Select Dividend ETF | DVY | $18.99 billion | 0.38% | 3.61% | -Holdings include Ford Motor Co., Verizon Communications Inc. -This index tracks around 100 high-dividend yield companies. |
| SPDR S&P Dividend ETF | SDY | $19.34 billion | 0.35% | 2.57% | -Top holdings include Realty Income Corp., Verizon Communications, Inc. -This fund invests in companies that have had a dividend for 20 consecutive years. |
Why Invest In Dividend Stocks or Funds?
Dividend stocks and funds appeal to investors for several reasons.
- You can benefit from a consistent income stream and have regular cash payouts typically on a quarterly basis. It is beneficial for those who are retirees or those seeking passive income.
- Companies who are able to make dividend distributions are generally viewed as financially healthy. This stability indicates the company can make room for long-term growth.
- Dividend investments help balance your portfolio by offering a steady income stream, reducing volatility and diversifying your holdings across different sectors.
Good To Know
You can invest in dividend ETFs or stocks that focus on specific sectors of the economy. Utilities, consumer staples and healthcare are often considered more stable and less volatile options.
Dividend ETFs vs. Other Investment Options
How do dividend ETFs compare to other investments? Check out this chart that compares them with other investment options.
| Investment | Pros | Cons |
|---|---|---|
| Dividend ETFs | -Typically financially healthy companies -Regular payouts -Potentially long-term capitalization opportunities |
-Dividend payouts are not guaranteed -May offer lower growth potential than other stocks -Concentration in certain sectors can limit diversification |
| Sectors ETFs | -Allows target investment in a particular sector -Professional management and liquidity -Opportunity for diversification in a particular sector |
-Overinvestment in a particular sector can be risky -ETFs may have high management fees -Sector-specific risks can impact returns |
| Stocks | -High potential for capital appreciation -Reinvestment can lead to compound growth |
-Typically do not pay dividends -Returns depend on market |
| Dividend stocks | -Possibility of higher yields -Direct ownership |
-Requires extensive research -Less diversification compared to other funds |
| Mutual funds | -Professional management -Suitable for various investment strategies |
-Higher expense ratios than ETFs -Potential for capital gains leading to tax implications |
Risks of Investing In Dividend ETFs
There are inherent risks in any investment. Here are the risks of investing in dividend ETFs:
- Dividend cuts. A company may have financial challenges and cut dividend payouts.
- Company-specific issues. A company may face management issues, increasing debt and potential lawsuits.
- Market risks. Rising rates can make dividend stocks less attractive, leading to potential price declines.
- Tax burden. Dividends are taxed as ordinary income, and as a result, this may cut into your investment return.
Trends Shaping Dividend ETFs in 2025
Various trends govern all investments. Here are some of the trends that are shaping the dividend ETF market.
Navigating Economic Certainty
Currently, the market is quite volatile with the stock market moving up and down because of various policy decisions like tariffs. Investors will likely encourage individuals to consider ETFs to stave off some of the market volatility.
Growth in Active ETFs
There is an increase in individuals choosing ETFs that are managed by a portfolio manager.
Increased Focus on Energy and Infrastructure
Investors seeking higher yields are gravitating toward stable, fee-based sectors.
Growing Interest in International Markets
The instability in the U.S. market pushes investors to seek stability. They are gravitating toward international markets for diversification and expansion.
How To Buy Dividend ETFs and Stocks
Looking to invest in the best dividend ETFs? Follow this step-by-step guide to get started.
- Define your investment goals.
- Have a clear strategy of whether you want a company focused on growth, higher dividend yields or a mixture of both.
- Choose a brokerage platform.
- Ideally you want to choose a brokerage platform with low or no commission fees. Also, it should have a user-friendly platform.
- Review data and research.
- Look at companies with financial stability and those that consistently distribute dividends.
- Decide how much to invest.
- Decide how much you want to invest based on what works for your financial strategy. You are now ready to place your order.
FAQ
Here are some of the most commonly asked questions about dividend ETFs.- What are the best dividend ETFs for beginners?
- Beginners should look for dividend ETFs with low fees and reliable income. Some of those investments include SCHD, VYM, SPYD and VIG.
- Should I invest in dividend ETFs in 2025?
- Yes, dividend investments are a good choice for 2025. They balance your portfolio, provide regular payouts, have a potential for growth and offer diversification.
- Which ETFs pay dividends?
- If you're looking for a consistent income from your investments, the following ETFs do payouts on a monthly schedule:
- SPDR S&P 500 ETF Trust
- ProShares S&P 500 Dividend Aristocrats ETF
- Vanguard High Dividend Yield ETF
- Vanguard FTSE Emerging Markets ETF
- If you're looking for a consistent income from your investments, the following ETFs do payouts on a monthly schedule:
- Are dividend ETFs good for long-term growth?
- Yes. Companies that usually pay a dividend are often financially stable. You can even reinvest your dividends to maximize your return. Dividend ETFs are also a hedge against inflation.
John Csiszar, Andrew Lisa, Daria Uhlig and Daniela Rivera-Herrera contributed to the reporting for this article.
Data is accurate as of April 25, 2024, and is subject to change.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
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