7 best exchange-traded ETFs for dividends

We have chosen several ETF-a, with a long history of paying dividends. These funds do not perform as strongly as shares, but at the expense of any income and extra stability, which shares dividends can provide.

iShares Core Dividend Growth ETF
Symbol: DGRO
Total assets: $1.2 billion
1-year return: 25.5%
Yield: 2.4%

In building its portfolio, this ETF takes into consideration both the past and the future. The fund tracks the Morningstar US Dividend Growth index, which targets firms that have raised dividends in each of the past five years.

The fund doesn’t have a long record. But since its launch in June 2014, it returned 10.6%, beating the 9.7% annualized gain of the S&P 500. Relatively few actively managed mutual funds have been able to make that claim.

iShares Core High Dividend ETF

Symbol: HDV
Total assets: $6.7 billion
1-year return: 16.6%
Yield: 3.4%

Here’s the recipe for the index this ETF follows: Start with all of the dividend-paying stocks in the U.S., then, using proprietary measures from Morningstar, sift for companies with strong competitive positions in their industries and finances that are sturdy enough to make it likely that a firm can repay its debts. The index then ranks all qualifying firms by dividend yield and includes the top 75.

Schwab U.S. Dividend Equity ETF
Symbol: SCHD
Total assets: $5.2 billion
1-year return: 21.9%
Yield: 3.1%

This fund wins high marks for its ultralow fees. But that’s not the only thing we like about the Schwab ETF, which is a member of the Kiplinger ETF 20, the list of our favorite exchange-traded funds. Its solid performance is another: Its five-year return beat 83% of its rivals (funds that invest in bargain-priced large-company stocks).

The fund holds 100 stocks, nearly all of them household names. Among the top holdings are Chevron (CVX), International Business Machines (IBM), Johnson & Johnson, Intel (INTC), Pfizer and Verizon Communications (VZ).

SPDR S&P Dividend ETF
Symbol: SDY
Total assets: $15.5 billion
1-year return: 24.1%
Yield: 2.2%

This is the oldest dividend ETF in the country and arguably the most stringent in selecting stocks for inclusion. The fund’s underlying benchmark, the S&P High Yield Dividend Aristocrats index, requires a company to have hiked its dividend for at least the past 20 years, among other factors.

Vanguard Dividend Appreciation ETF

Symbol: VIG
Total assets: $28.0 billion
1-year return: 21.0%
Yield: 2.1%

We really dig this fund’s focus on firms that regularly boost their dividends. Dividend Appreciation tracks the Nasdaq US Dividend Achievers index, but eligible stocks include any security listed on the Nasdaq or the New York Stock exchanges.

The main qualification is that a company must have increased payouts for at least 10 consecutive years. Limited partnerships, REITs and financially troubled firms are excluded.

Vanguard High Dividend Yield ETF
Symbol: VYM
Total assets: $23.9 billion
1-year return: 23.9%
Yield: 3.1%

As its name implies, this ETF focuses on stocks with the juiciest yields. Its underlying index starts with a broad database of U.S. stocks (excluding REITs) that pay dividends. The remaining stocks are ranked by dividend yield and added to the underlying index until the cumulative market value of all stocks reaches 50% of the total market cap of the entire U.S. stock market.

All told, the fund owns shares of more than 400 companies, most of them large. Holdings in the fund have an average market value of $82 billion. The three biggest holdings are Microsoft, ExxonMobil and Johnson & Johnson.

WisdomTree U.S. Quality Dividend Growth ETF
Symbol: DGRW
Total assets: $1.2 billion
1-year return: 24.1%
Yield: 2.0%

Warren Buffett should love this ETF. That’s because its process relies on what WisdomTree calls the “Buffett factor”: consistent profitability. In particular, the ETF favors dividend payers that have posted a high return on assets (an indication of how efficiently executives use company assets to generate profits), have produced a superior return on equity over the past three years, and are expected to deliver high earnings growth over the next three to five years.

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