The Only 5 ETFs You Need to Build Wealth for Retirement

Dividend stocks are a foundational building block for creating a retirement portfolio, offering a reliable income stream and potential for capital appreciation. By investing in companies that consistently pay and grow dividends, retirees can secure cash flow to cover living expenses while combating inflation through rising payouts.

Historically, dividend stocks have outperformed their non-dividend peers. According to data from Hartford Funds, from 1973 to 2023, they delivered 9.2% annualized returns versus 4.3%, and with lower volatility. 

Exchange-traded funds (ETFs) enhance this strategy by providing instant diversification, low costs, and access to a curated selection of dividend-paying companies, reducing the risk of individual stock failures. Finding those that focus on high-quality, dividend-growing firms, makes them ideal for long-term retirement planning.

With low expense ratios and broad sector exposure, these ETFs simplify portfolio construction while maximizing income and stability. Below are five top dividend ETFs you should buy for your retirement portfolio. They are the only ETFs you will need to generate the wealth you need to live out your Golden Years in comfort.

Schwab U.S. Dividend Equity ETF (SCHD)

The Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) is a top choice for retirees seeking income, growth, and stability. With a 3.9% yield, SCHD delivers reliable income, ideal for covering retirement expenses. 

Its focus on 103 high-quality dividend stocks, many of which are Dividend Aristocrats, or stocks that have grown their payout for 25 years or more, including AbbVie (NYSE:ABBV) and Target (NYSE:TGT), which ensures stability through low debt-to-equity ratios and high returns on equity. 

SCHD’s 12% annualized returns since inception in 2011 support long-term income increases, outpacing inflation. The ETF has also grown its dividend 12% annually for the past decade while its 0.06% expense ratio maximizes returns, making SCHD’s diversified, defensive holdings a secure, growing income stream.

Vanguard Dividend Appreciation ETF (VIG)

The Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) is the second ETF you need for building long-term wealth. With a 1.7% yield, VIG provides steady, though modest, income, supported by 338 large-cap stocks like Eli Lilly (NYSE:LLY) and JPMorgan Chase (NYSE:JPM), each with more than 10 years of dividend increases. 

The ETF’s 11.2% annualized 10-year return drives strong capital appreciation, ideal for portfolio growth. A 0.05% expense ratio ensures cost efficiency, maximizing returns for retirees. VIG’s diversified portfolio, with 23% in technology and 17% in healthcare, offers stability through quality firms with low payout ratios. 

While its lower yield suits growth-focused retirees, VIG’s consistent dividend growth — 10.7% annually for the last five years — and resilience make it a reliable base investment for retirement planning.

iShares Core Dividend Growth ETF (DGRO)

The iShares Core Dividend Growth ETF (NYSE:DGRO) is your third choice for building long-term wealth. Offering a 2.4% yield, DGRO provides reliable income from 408 stocks including ExxonMobil (NYSE:XOM) and Bank of America (NYSE:BAC), each with over a decade of dividend growth. 

The ETF’s 11.6% 10-year annualized return supports robust capital appreciation, ideal for portfolio expansion. With a 0.08% expense ratio, DGRO is another ETF ensuring cost efficiency, critical for retirees. Its diversified portfolio — 23% financials, 18% technology, and 15% healthcare –focuses on quality firms with payout ratios below 75%, enhancing stability. 

While sensitive to economic cycles, DGRO’s focus on fundamentally strong companies minimizes volatility. For retirees, DGRO’s blend of steady income, consistent growth, and resilient holdings makes it a dependable retirement portfolio anchor.

Vanguard High Dividend Yield ETF (VYM)

The Vanguard High Dividend Yield ETF (NYSEARCA:VYM) is a compelling choice for retirees building wealth through income, growth, and stability. With a 2.8% yield, VYM delivers robust income from 587 high-yield stocks such as AT&T (NYSE:T) and Johnson & Johnson (NYSE:JNJ), but excluding real estate investment trusts for tax efficiency.

The ETF’s 9.4% annualized 10-year return supports steady capital appreciation, ideal for long-term growth. A 0.06% expense ratio also ensures maximum returns. VYM’s diversified portfolio — 20% financials and 13% each in consumer staples and industrials — focuses on stable, blue-chip firms with strong balance sheets to reduce volatility. 

Although sensitive to interest rate hikes, VYM’s quality holdings provide resilience. For retirees, VYM’s high income, consistent growth, and defensive structure make it a reliable retirement portfolio ETF.

SPDR S&P Dividend ETF (SDY)

The SPDR S&P Dividend ETF (NYSEARCA:SDY) is the fifth ETF needed for generating wealth in a retirement portfolio. Its 2.6% yield provides reliable quarterly income from 149 stocks on the S&P High Yield Dividend Aristocrats Index like Realty Income (NYSE:O) and Kimberly-Clark (NYSE:KMB), each with 27 years or more of dividend increases. Its 9% annualized 10-year return and five-year record of raising the payout by over 10% annually, supports steady capital appreciation for long-term growth. 

Despite a higher 0.35% expense ratio, SDY’s focus on ultra-reliable firms with average payout ratios below 60% ensures stability. Its sector mix — 20% industrials, 16% consumer staples, and 14% utilities — makes it ideal for risk-averse retirees. While less diversified than peers, SDY’s proven dividend growth and rock-solid holdings make it a dependable choice for consistent retirement income and wealth preservation.

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