If you're looking to generate passive income and grow your portfolio, dividend ETFs can be a great option. These exchange-traded funds (ETFs) focus on companies that consistently pay dividends to shareholders. By investing in dividend ETFs, you can benefit from regular income payments and participate in the growth potential of these established companies. In this article, we will explore the 10 best dividend ETFs to buy right now, based on their performance, dividend yield, and consistency.
Why Invest in Dividend ETFs?
Dividend ETFs provide a unique opportunity for investors to earn regular income while taking advantage of the stability and growth potential of established companies. Here are some key reasons why you might consider investing in dividend ETFs:
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Income Generation: Dividend ETFs are specifically designed to generate income for investors. By investing in companies with a history of paying dividends, you can earn regular income payments.
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Portfolio Diversification: Dividend ETFs typically invest in a wide range of companies across different sectors. This diversification can help reduce risk and enhance the stability of your portfolio.
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Capital Appreciation: Along with regular income payments, dividend ETFs also offer the potential for capital appreciation. As the underlying companies grow and their stock prices rise, the value of your investment can increase over time.
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Stable Income: Dividend-paying companies are often more stable and established compared to growth-oriented companies. This stability can provide a reliable source of income, especially during times of market volatility.
Now that we understand the benefits of investing in dividend ETFs, let's explore the 10 best dividend ETFs to buy right now:
1. Vanguard Dividend Appreciation ETF (VIG)
The Vanguard Dividend Appreciation ETF (VIG) focuses on companies with a history of increasing dividends over time. This ETF tracks the NASDAQ US Dividend Achievers Select Index and includes companies from various sectors. With an expense ratio of just 0.06%, VIG is an attractive option for investors looking for low-cost dividend ETFs.
Some key features of VIG include:
- Dividend Yield: VIG has a current dividend yield of 1.70%.
- Performance: Over the past 5 years, VIG has provided an average annual return of 12.39%.
- Top Holdings: VIG's top holdings include Microsoft, Visa, and Procter & Gamble.
2. iShares Select Dividend ETF (DVY)
The iShares Select Dividend ETF (DVY) focuses on high-dividend-paying stocks. This ETF tracks the Dow Jones U.S. Select Dividend Index and includes companies from various sectors. DVY has an expense ratio of 0.39% and is an excellent choice for investors looking for dividend ETFs with a focus on income generation.
Some key features of DVY include:
- Dividend Yield: DVY has a current dividend yield of 3.61%.
- Performance: Over the past 5 years, DVY has provided an average annual return of 9.84%.
- Top Holdings: DVY's top holdings include AT&T, Exxon Mobil, and Johnson & Johnson.
3. Schwab U.S. Dividend Equity ETF (SCHD)
The Schwab U.S. Dividend Equity ETF (SCHD) is known for its low expense ratio and focus on high-quality dividend stocks. This ETF tracks the Dow Jones U.S. Dividend 100 Index and includes companies that have increased their dividends for at least 10 consecutive years. With an expense ratio of 0.06%, SCHD is an excellent option for investors seeking low-cost dividend ETFs.
Some key features of SCHD include:
- Dividend Yield: SCHD has a current dividend yield of 2.75%.
- Performance: Over the past 5 years, SCHD has provided an average annual return of 11.51%.
- Top Holdings: SCHD's top holdings include Microsoft, Coca-Cola, and Procter & Gamble.
4. SPDR S&P Dividend ETF (SDY)
The SPDR S&P Dividend ETF (SDY) focuses on companies that have consistently increased their dividends for at least 20 consecutive years. This ETF tracks the S&P High Yield Dividend Aristocrats Index and includes companies from various sectors. SDY has an expense ratio of 0.35% and is an attractive option for investors looking for dividend ETFs with a history of dividend growth.
Some key features of SDY include:
- Dividend Yield: SDY has a current dividend yield of 2.55%.
- Performance: Over the past 5 years, SDY has provided an average annual return of 10.57%.
- Top Holdings: SDY's top holdings include AT&T, AbbVie, and Chevron.
5. iShares Core Dividend Growth ETF (DGRO)
The iShares Core Dividend Growth ETF (DGRO) focuses on companies that have a history of increasing dividends. This ETF tracks the Morningstar US Dividend Growth Index and includes companies from various sectors. DGRO has an expense ratio of 0.08% and is a suitable option for investors looking for dividend ETFs with a balance between dividend growth and current income.
Some key features of DGRO include:
- Dividend Yield: DGRO has a current dividend yield of 2.21%.
- Performance: Over the past 5 years, DGRO has provided an average annual return of 12.04%.
- Top Holdings: DGRO's top holdings include Microsoft, Apple, and Amazon.
6. ProShares S&P 500 Dividend Aristocrats ETF (NOBL)
The ProShares S&P 500 Dividend Aristocrats ETF (NOBL) focuses on companies that have consistently increased their dividends for at least 25 consecutive years. This ETF tracks the S&P 500 Dividend Aristocrats Index and includes companies from various sectors. NOBL has an expense ratio of 0.35% and is an attractive option for investors seeking dividend ETFs with a long history of dividend growth.
Some key features of NOBL include:
- Dividend Yield: NOBL has a current dividend yield of 1.88%.
- Performance: Over the past 5 years, NOBL has provided an average annual return of 12.27%.
- Top Holdings: NOBL's top holdings include Microsoft, Abbott Laboratories, and Coca-Cola.
7. WisdomTree U.S. High Dividend Fund (DHS)
The WisdomTree U.S. High Dividend Fund (DHS) focuses on high-dividend-paying U.S. companies. This ETF tracks the WisdomTree U.S. High Dividend Index and includes companies from various sectors. DHS has an expense ratio of 0.38% and is a suitable option for investors looking for dividend ETFs with a focus on high-dividend yields.
Some key features of DHS include:
- Dividend Yield: DHS has a current dividend yield of 4.33%.
- Performance: Over the past 5 years, DHS has provided an average annual return of 9.87%.
- Top Holdings: DHS's top holdings include AT&T, Exxon Mobil, and Verizon Communications.
8. Invesco Dividend Achievers ETF (PFM)
The Invesco Dividend Achievers ETF (PFM) focuses on companies that have consistently increased their dividends for at least 10 consecutive years. This ETF tracks the NASDAQ US Broad Dividend Achievers Index and includes companies from various sectors. PFM has an expense ratio of 0.46% and is a suitable option for investors seeking dividend ETFs with a focus on dividend growth.
Some key features of PFM include:
- Dividend Yield: PFM has a current dividend yield of 1.79%.
- Performance: Over the past 5 years, PFM has provided an average annual return of 11.47%.
- Top Holdings: PFM's top holdings include Microsoft, Visa, and Johnson & Johnson.
9. Global X SuperDividend ETF (SDIV)
The Global X SuperDividend ETF (SDIV) focuses on high-dividend-paying companies globally. This ETF tracks the Solactive Global SuperDividend Index and includes companies from various countries and sectors. SDIV has an expense ratio of 0.59% and is an attractive option for investors looking for dividend ETFs with global exposure.
Some key features of SDIV include:
- Dividend Yield: SDIV has a current dividend yield of 8.66%.
- Performance: Over the past 5 years, SDIV has provided an average annual return of 6.31%.
- Top Holdings: SDIV's top holdings include Vodafone Group, Novartis, and BT Group.
10. First Trust Value Line Dividend Index Fund (FVD)
The First Trust Value Line Dividend Index Fund (FVD) focuses on companies that have consistently paid dividends and have strong financials. This ETF tracks the Value Line Dividend Index and includes companies from various sectors. FVD has an expense ratio of 0.70% and is a suitable option for investors looking for dividend ETFs with a focus on fundamental analysis.
Some key features of FVD include:
- Dividend Yield: FVD has a current dividend yield of 1.96%.
- Performance: Over the past 5 years, FVD has provided an average annual return of 10.22%.
- Top Holdings: FVD's top holdings include Microsoft, Johnson & Johnson, and JPMorgan Chase.
Comparison Chart: 10 Best Dividend ETFs
Here is a comparison chart summarizing the key features of the 10 best dividend ETFs:
| ETF Name | Dividend Yield | Expense Ratio | 5-Year Average Annual Return |
|---|---|---|---|
| Vanguard Dividend Appreciation ETF | 1.70% | 0.06% | 12.39% |
| iShares Select Dividend ETF | 3.61% | 0.39% | 9.84% |
| Schwab U.S. Dividend Equity ETF | 2.75% | 0.06% | 11.51% |
| SPDR S&P Dividend ETF | 2.55% | 0.35% | 10.57% |
| iShares Core Dividend Growth ETF | 2.21% | 0.08% | 12.04% |
| ProShares S&P 500 Dividend Aristocrats ETF | 1.88% | 0.35% | 12.27% |
| WisdomTree U.S. High Dividend Fund | 4.33% | 0.38% | 9.87% |
| Invesco Dividend Achievers ETF | 1.79% | 0.46% | 11.47% |
| Global X SuperDividend ETF | 8.66% | 0.59% | 6.31% |
| First Trust Value Line Dividend Index Fund | 1.96% | 0.70% | 10.22% |
Conclusion
Investing in dividend ETFs can be a smart strategy for generating regular income and participating in the growth potential of established companies. By choosing the right dividend ETFs, you can build a diversified portfolio that provides stability, income, and the potential for capital appreciation.
In this article, we explored the 10 best dividend ETFs to buy right now, including Vanguard Dividend Appreciation ETF (VIG), iShares Select Dividend ETF (DVY), Schwab U.S. Dividend Equity ETF (SCHD), SPDR S&P Dividend ETF (SDY), iShares Core Dividend Growth ETF (DGRO), ProShares S&P 500 Dividend Aristocrats ETF (NOBL), WisdomTree U.S. High Dividend Fund (DHS), Invesco Dividend Achievers ETF (PFM), Global X SuperDividend ETF (SDIV), and First Trust Value Line Dividend Index Fund (FVD).
Consider your investment goals, risk tolerance, and income needs when selecting the best dividend ETFs for your portfolio. It's always a good idea to consult with a financial advisor or do thorough research before making any investment decisions. Happy investing!