What Are Dividend ETFs?
Dividend ETFs are exchange-traded funds built around dividend-paying stocks. Instead of picking individual companies, you buy a single fund that holds a basket of dividend payers across different sectors. That gives you instant diversification, low management fees, and regular dividend payments on a recurring schedule.
Most of these popular dividend ETFs are set up as a standalone share class on the New York Stock Exchange, with a live market price. You can buy or sell them at any time through a brokerage firm, unlike traditional mutual funds, which are often more complicated to trade. Plus, because of how they are structured, they’re generally more tax-efficient than mutual funds, so you’re less likely to be hit with any unexpected distributions at the end of the year.
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What Are the Four Best Dividend ETFs in 2026?
At the top of the list for most popular dividend ETFs right now are VIG, VYM, DGRO, and SCHD. Each one of these ETFs has a different approach to finding dividend-paying stocks, and they all serve different investment goals. Here’s a quick rundown on each.
VIG: A Dividend ETF Built for Long-Term Growth
VIG is the Vanguard Dividend Appreciation ETF, with $104 billion in assets.1 It’s the largest dividend equity ETF out there, and tracks the S&P U.S. Dividend Growers Index, which focuses on companies that have a history of raising their dividend payouts every year. It excludes the top 25% highest-yielding stocks and real estate investment trusts entirely.
VIG holds 339 stocks, with its top 10 making up 33.22% of the fund. The expense ratio is 0.04%, or $4 per year on a $10,000 investment. The dividend growth rate over the last 10 years is 6.94% per year, and the fund has averaged 13.57% in annual total returns over the same period. For investors who can play the long game, those numbers make a compelling case.
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VYM: The High Dividend Yield ETF for Diversification
The Vanguard High Dividend Yield ETF, VYM, tracks the FTSE High Dividend Yield Index, which focuses on stocks forecasted to pay above-average dividends.2 Vanguard High Dividend Yield is the broadest portfolio of the four, with 562 holdings across market cap ranges and sectors. It has a 0.04% expense ratio and holds $75 billion in assets.
VYM gives you a 2.26% trailing twelve-month yield, a 5.00% average annual payout increase rate over the past 10 years, and 100% qualified dividends in 2025. The fund has averaged 12.14% in annual total returns over the past 10 years. Consumer staples, financials, and energy-oriented dividend-paying stocks carry more weight here because the index screens for high yield rather than growth.
If you want a high dividend ETF generating steady dividend income with broad diversification across sectors, VYM delivers.
DGRO: A Balanced Dividend Growth ETF
DGRO is the iShares Core Dividend Growth ETF from BlackRock, tracking the Morningstar U.S. Dividend Growth Index.3 The fund holds companies with a history of sustained dividend increases, spread out across sectors and asset classes. iShares Core ETFs like DGRO are designed as long-term building blocks for your investment portfolio.
DGRO holds 395 stocks, with the top 10 making up 26.30% of the fund. The expense ratio is 0.08%. The trailing twelve-month yield is 1.97%, and the 10-year average payout appreciation rate of 8.59% per year is the second highest here. Where DGRO really stands out is total returns: its 10-year average annual return of 13.86% is the highest of all four funds. DGRO reported 100% qualified dividends in 2024, pays quarterly, and holds a 43% overlap with the S&P 500.
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SCHD: The High Dividend ETF for Income
SCHD is the Schwab U.S. Dividend Equity ETF, built with a very strict set of screening requirements. Charles Schwab designed it to track the Dow Jones U.S. Dividend 100 Index – which in turn requires companies to have paid out dividends for at least 10 consecutive years.4 When evaluating cash flows, financial health and yield relative to other companies in the same sectors is also taken into account.
SCHD holds a relatively small 101 stocks but the top 10 make up 42.14% of the fund. The 3.32% trailing twelve-month yield is the highest of all four funds, as well as the 10-year dividend payout increase rate of 10.61% per year. The fund holds an impressive $85 billion in assets, charges just 0.06%, and has averaged 12.73% in annual total returns over the past 10 years. In 2025, 98.48% of dividends were qualified.
SCHD has a modest 7% overlap with the S&P 500, which means that investors who hold a core index fund can still add real diversification to their portfolio.
How Do These 4 Dividend ETFs Compare?
| Metric (data as of 3/10/2026) | VIG | VYM | DGRO | SCHD |
| AUM | $104B | $75B | $39B | $85B |
| Year Launched | 2006 | 2006 | 2014 | 2011 |
| Expense Ratio | 0.04% | 0.04% | 0.08% | 0.06% |
| Total Holdings | 339 | 562 | 395 | 101 |
| Dividend Yield (TTM) | 1.56% | 2.26% | 1.97% | 3.32% |
| Dividend Growth 10Y (CAGR) | 6.94% | 5.00% | 8.59% | 10.61% |
| Qualified Dividends | 100% (2025) | 100% (2025) | 100% (2024) | 98.48% (2025) |
| 10-Year Annual Return | 13.57% | 12.14% | 13.86% | 12.73% |
| S&P 500 Overlap | 41% | 35% | 43% | 7% |
| Best for | Long-Term Growth | Diversification | Balanced Growth | Income |
No single fund wins every category. VIG and DGRO come out ahead on total returns, SCHD wins on yield and payout increases and VYM leads on diversification. Many investors in the investing community built around passive income strategies end up holding two of these along with a core index fund for broader exposure.
Which Dividend ETF Is Right for You?
What you’re after really does drive the choice. Each fund is built with a very specific goal in mind.
For long term payout appreciation and total returns, VIG is your best bet. It focuses on companies with a proven record of raising their dividend payouts and has averaged a respectable 13.57% per year over the past decade. If you want broad exposure across dividend-paying stocks, then VYM is a better choice. It covers the most ground with 562 stocks in total and a high 2.26% yield, all while keeping the expense ratio nice and low at 0.04%.
For those looking for strong total returns alongside rising dividends, DGRO’s 13.86% 10-year average return puts it at the top of the pack here. The fund has a solid mix of stocks, making it a great choice for anyone looking for a balanced dividend equity ETF.
For investors focused on getting income right now, SCHD comes out on top with a 3.32% yield, an impressive 10.61% payout increase rate, and an astoundingly low 7% S&P 500 overlap.
There are a few other points worth mentioning as well: The S&P 500 has averaged around 14.78% per year over the past 10 years, which puts it in the lead over all four of our dividend ETFs. Dividend ETFs offer something that pure equity funds can’t: a certain level of cash flow stability that lets you avoid forced selling during downturns.
How Costs, Taxes, and Account Type Impact These Investments
All four funds have very low expense ratios. VIG and VYM at 0.04%, SCHD at 0.06%, DGRO at 0.08%. That’s $8 a year on $10,000. Actively managed mutual funds, by contrast, charge 0.50% to 1.00%. That’s a large gap which can add up and eat away at your returns over 20 to 30 years.
Account type matters more than cost. Inside a Roth IRA, dividends compound tax-free, and withdrawals in retirement are 100% tax-free. Hard to beat that. In a taxable account, dividends are taxed every year whether reinvested or not, though all four funds pay qualified dividends, which get the lower capital gains rate rather than ordinary income rates.5
For a more detailed look at placement strategy, check out InvestLane’s 6 best dividend ETFs for taxable accounts. And if you want to pair these with bonds as a volatility buffer, the simplest 3-fund portfolio is a solid framework.
Your Next Steps
VIG, VYM, SCHD, and DGRO are four of the best dividend ETFs you can buy right now. They’re inexpensive to own, diversified, distribute qualified dividends, and have delivered real investment returns over the past decade. Whether current yield, payout appreciation, total return, or genuine diversification is what you are after, there’s a fund here that fits.
Pick the one that matches your future goals, get it in the right kind of account, and let the dividends start working for you. If you still need a platform to buy through, InvestLane’s best brokerage accounts guide is a solid place to start.
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