5 Dividend ETFs Every Passive Income Investor Needs Now

Dividend investing is an attractive investing model for people who want to own stocks and generate passive income. Most companies pay out dividends each quarter, but it can be complicated to stay on top of so many companies.

That’s why dividend ETFs are around. These funds make it easy to gain exposure to a basket of dividend stocks. These funds then make cash distributions to their investors based on the accrued dividends from various corporations. Dividend investors who want solid yields may want to monitor these five ETFs. 

iShares Core Dividend Growth ETF (DGRO)

The iShares Core Dividend Growth ETF (NYSEARCA:DGRO) offers exposure to dividend growth stocks. Investments in this category usually have lower yields but rapidly growing dividend payouts. That’s why some of the top holdings have dividend yields that hover at around 1%. However, the fund still produces a respectable 2.28% yield and only has a 0.08% expense ratio.

An approach on lower yielding stocks with higher upside has translated into an annualized 11.8% return over the past decade. A strong focus on tech is part of the reason the fund has been successful. DGRO allocated almost 20% of its assets to the sector.

Vanguard High Dividend Yield Index Fund ETF (VYM)

The Vanguard High Dividend Yield Index Fund ETF (NYSEARCA:VYM) focuses on high yield stocks and has a 2.63% yield right now. Its 0.06% expense ratio means you get to keep almost all of the gains, and there have been plenty of them.

VYM has an annualized 13.6% return over the past five years with its portfolio of almost 600 holdings. The top 10 holdings make up 25% of the fund’s total assets, with Broadcom (NASDAQ:AVGO) leading the way. This stock makes up almost 6% of the fund’s total assets. 

Schwab US Dividend Equity ETF (SCHD)

The Schwab US Dividend Equity ETF (NYSEARCA:SCHD) is a popular dividend ETF among dividend investors due to its high yield and relatively low volatility. The fund has a yield that hovers near 4% and a 0.06% expense ratio that’s pretty difficult to notice due to the high yield.

SCHD also has an annualized return of 13.3% over the past five years. The fund’s top 10 holdings make up 40% of its total assets. The ETF has 103 total holdings, with Chevron (NYSE:CVX) being the largest holding in the entire portfolio. It makes up more than 4% of the fund’s total assets.

Vanguard Dividend Appreciation Index Fund (VIG)

The Vanguard Dividend Appreciation Index Fund (NYSEARCA:VIG) offers exposure to growing dividend stocks while giving a 1.69% yield. The fund only has a 0.05% expense ratio, which means you get to keep almost all of your gains.

Furthermore, the fund has an annualized return of 14.1% over the past five years. The major theme for high-performing funds is a strong focus on tech stocks, and you’ll see that trend continue for VIG. The fund allocates more than one-quarter of its assets to tech, with financial services getting another 22.8% of the fund’s total assets. 

Fidelity High Dividend ETF (FDVV)

The Fidelity High Dividend ETF (NYSEARCA:FDVV) has produced an annualized 17.9% return over the past five years while providing a 3.13% yield. It’s hard to find a fund that has that type of return and a high yield. FDVV has a 0.16% expense ratio, which is higher than the others, but it’s still quite low compared to industry norms.

Once again, tech makes up about one-quarter of a top-performing ETF. The fund has a little more than 100 stocks, with many artificial intelligence beneficiaries in its top 10 holdings.

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