Top Dividend ETFs of 2024

Investing in dividend exchange-traded funds (ETFs) can enhance your portfolio’s performance, providing optimal risk-adjusted returns. However, not all dividend ETFs follow the same principles. Generally, dividend ETFs fall into two categories: high-dividend yield ETFs and dividend appreciation ETFs.

High-dividend yield ETFs typically mirror indexes that emphasize stocks with the highest yields. To identify the top dividend ETFs for 2024, we conducted a comprehensive review of various high-dividend yield and dividend appreciation ETFs, evaluating factors such as management style, expense ratios, dividend yields, ratings, and total assets. ETFs with high turnover rates or annual yields below 1.75% were excluded from our list.

Why Trust Our Experts?

Our experienced fund analysts meticulously select the best funds based on a thorough screening process covering essential metrics. These metrics include assets under management, expense ratios, strategy, management quality, minimum investment requirements, turnovers, and fees. Our selections undergo a rigorous three-step editorial review process and are fact-checked at three levels to ensure accuracy.

• 150+ dividend ETFs screened
• 5-star rating from Morningstar
• Three levels of fact-checking
• Three-step editorial review

Best Dividend ETFs

Vanguard High Dividend Yield ETF (VYM)

• Expense Ratio: 0.06%
• Total Assets: $52.5 billion
• Morningstar Rating: 4 stars
• Category: U.S. large-cap value

Overview:

Vanguard High Dividend Yield ETF (VYM) offers low-cost, highly diversified exposure to large-cap U.S. stocks screened for high yields. The ETF tracks the FTSE High Dividend Yield Index, which includes over 450 stocks. VYM is well-diversified across all ten stock market sectors, emphasizing consumer staples and financial services—additionally, the fund benefits from a low turnover rate.

Pros:

• High sector diversification
• Low expense ratios
• Low fund turnover

Cons:

• Slight concentration in financial sector stocks
• Limited exposure to mid-cap stocks
• No international stock exposure

Schwab U.S. Dividend Equity ETF (SCHD)

• Expense Ratio: 0.06%
• Total Assets: $53.9 billion
• Morningstar Rating: 5 stars
• Category: U.S. large-cap value

Overview:

The Schwab U.S. Dividend Equity ETF (SCHD) focuses on quality and sustainability, tracking the Dow Jones U.S. Dividend 100 Index. This ETF consists of 100 stocks chosen for their robust financial ratios and sustainable dividends.

SCHD offers a more concentrated portfolio than Vanguard’s high-dividend ETF, appealing to investors seeking higher conviction holdings. The ETF features significant investments in Amgen (AMGN), Cisco (CSCO), and AbbVie (ABBV). SCHD provides a substantial dividend yield exceeding 3%.

Pros:

• Higher-than-average yields
• Rigorous quality screening of holdings
• Sustainable dividend focus

Cons:

• Concentrated in health care and financial sector stocks
• No small-cap stock exposure
• Smaller portfolio with higher turnover

WisdomTree U.S. LargeCap Dividend Fund (DLN)

• Expense Ratio: 0.28%
• Total Assets: $3.8 billion
• Morningstar Rating: 5 stars
• Category: U.S. large-cap value

Overview:

The WisdomTree U.S. LargeCap Dividend Fund (DLN) tracks the WisdomTree U.S. LargeCap Dividend Index, which selects around 300 top companies based on market cap from the broader WisdomTree U.S. Dividend Index.

Unlike other dividend ETFs, DLN weights its holdings based on projected dividends rather than market cap, favoring companies expected to pay higher yields.

Pros:

• A balanced approach to income and growth
• Reasonable diversification
• Weighting by projected yields

Cons:

• Higher fund turnover
• Higher expense ratio
• Lower dividend yield

ProShares S&P 500 Dividend Aristocrats ETF (NOBL)

Expense Ratio: 0.35%

Total Assets: $11.8 billion

Overview:

Best known for its leveraged ETFs, ProShares also offers hidden gems like NOBL. This ETF focuses on 67 S&P 500 dividend aristocrat stocks, companies that have paid and grown dividends for at least 25 consecutive years. This strategy aims to reduce volatility and downside risk during market fluctuations.

Pros:

• Higher exposure to defensive sectors like consumer staples.
• Balanced, quasi-equal weight allocation.
• Low tracking error.

Cons:

• Limited portfolio with fewer holdings.
• Higher expense ratio.
• Lower dividend yield.

Additional Information:

• Morningstar Rating: 4 stars
• Category: U.S. large-cap value

iShares Core Dividend Growth ETF (DGRO)

Expense Ratio: 0.08%

Total Assets: $26.4 billion

Overview:

DGRO is BlackRock’s flagship dividend ETF in their low-cost “core” lineup, designed to serve as foundational portfolio building blocks. The fund holds over 400 stocks tracked by the Morningstar US Dividend Growth Index. It is broadly diversified across sectors, focusing on stocks with a history of consistently growing dividends.

Pros:

• Low expense ratio.
• Good diversification.
• Balanced sector allocation.

Cons:

• No exposure to international stocks.
• Minimal small-cap exposure.
• Higher turnover rate.

Additional Information:

• Morningstar Rating: 4 stars
• Category: U.S. large-cap value

SPDR S&P Dividend ETF (SDY)

Expense Ratio: 0.35%

Total Assets: $20.1 billion

Overview:

SDY tracks the S&P High Yield Dividend Aristocrats Index, focusing on stocks with at least 20 years of consecutive dividend growth. The ETF adjusts holdings quarterly and weights them by yield, minimizing exposure to sectors like technology and communication services compared to other dividend ETFs.

Pros:

• Greater weighting to higher-yielding stocks.
• Holdings with a history of dividend growth.
• Long performance history.

Cons:

• Concentrated portfolio with fewer holdings.
• Higher expense ratio.
• Limited exposure to specific sectors.

Additional Information:

• Morningstar Rating: 4 stars
• Category: U.S. mid-cap value

WisdomTree U.S. Quality Dividend Growth Fund (DGRW)

Expense Ratio: 0.28%

Total Assets: $12.3 billion

Overview:

DGRW takes a rigorous approach to dividend investing by tracking the WisdomTree U.S. Quality Dividend Growth Index. The index screens for stocks with high long-term earnings growth expectations and quality factors. The portfolio is weighted based on the projected dividend payouts, giving more weight to stocks expected to pay higher dividends.

Pros:

• Exposure to growth stocks.
• Quality screening for holdings.
• Weighting based on projected yields.

Cons:

• Higher fund turnover.
• Higher expense ratio.
• Lower dividend yield.

Additional Information:

• Morningstar Rating: 5 stars
• Category: U.S. large-cap blend

Conclusion

Each of these dividend ETFs offers unique benefits and drawbacks. Deciding which is right depends on your specific investment goals, risk tolerance, and the role you want dividends to play in your portfolio. If you’re looking for low expenses, historical solid performance, or diversified holdings, a dividend ETF suits your needs.