“Stocks go up” isn’t the only way to get ahead in the market. A focus on dividend stocks can help you generate another type of return by sharing directly in the profits of a company via regular payouts to your investment account.
And you can buy diversified bundles of these stocks through dividend exchange-traded funds (ETFs).
Today, I’m going to help you dive into the best dividend ETFs for 2025. I’ll give you a quick primer on dividend stocks, discuss why you might want to buy dividend funds to get exposure to these stocks, and list what I believe are some of the best dividend ETFs you can buy for the coming year.
Disclaimer: This article does not constitute individualized investment advice. These funds appear for your consideration and not as personalized investment recommendations. Act at your own discretion.
Editor’s Note: Tabular data presented in this article are up-to-date as of Dec. 31, 2024.
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Table of Contents
What Is a Dividend Stock?
A dividend is a cash payment from a company to shareholders. Companies that regularly provide these cash payments are referred to as dividend stocks.
Often, investors favor dividend stocks because, to regularly pay out those dividends, they have to generate consistent and significant profits—a good sign that the company is financially healthy and well-managed.
Why Invest in Dividend Stocks via ETFs?
As a group, dividend stocks are pretty common, but they’re not created equally. Some companies only pay nominal dividends that are just a penny or two per share, with no prospect for dividend growth anytime soon. Others may offer generous but unsustainable dividend payouts that might be eliminated altogether in the future.
That’s why exchange-traded funds are a good alternative to individual dividend stocks. ETFs spread your money around, rather than force you to rely on one company’s specific strengths and weaknesses.
And finding the best stocks capable of consistently paying dividends and enjoying significant future dividend growth can be a daunting task, even for seasoned investors. So instead, why not try to gain exposure to dividend-paying stocks via a single, diversified holding that’s tasked with finding great companies for you?
That’s what the best dividend ETFs have to offer.
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A Note About Dividend Yields
A term you’re going to want to familiarize yourself with is dividend yield.
A dividend yield tells you how much of your investment you can expect to get back in the form of dividends. A stock’s dividend yield, for instance, is calculated on an annualized basis, and expressed as a percentage of share price. Example: If a stock trades for $100 and pays 50¢ per quarter, that’s $2.00 in annual payouts—or 2.0% of the share price. So its dividend yield is 2.0%. Pretty easy.
But a fund’s dividend yield is calculated a little differently. It’s much more difficult to estimate future payouts for an ETF or mutual fund because they own groups of many different stocks paying on changing cycles.
The fairest way to measure yield in dividend ETFs and mutual funds is to calculate the distributions over the last calendar year. Dividends might change for these funds going forward, but a trailing 12-month look is the most faithful way to calculate yield.
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What Is Yield-on-Cost?
When you look up an ETF’s information, the dividend yield listed is based on the past year’s worth of dividend payments and the current ETF share price.
That yield is often very different than the one current ETF shareholders enjoy. That yield is called “yield on cost,” which is the payout based on what you said, at the moment you invested.”
Let’s say you buy an ETF at $100, and it pays $1 per share annually. It yields 1.0% when you buy it ($1 / $100 x 100 = 1.0%).
In a year, that ETF has doubled to $200 per share, but the dividends it pays also doubled, to $2 per share. If you look up its information, its dividend is still 1.0% ($2 / $200 x 100 = 1.0%).
That’s not your yield on cost, however. You’re still receiving that higher dividend of $2 per share. But your cost basis is still the original $100 you bought the ETF share at. So now, your yield on cost has doubled, to 2.0% ($2 / $100 * 100 = 2.0%)!
Our Favorite Dividend ETFs
Like with any investment, what constitutes the best ETFs for the yield-minded depends on the individual’s personal goals. There are many ways to invest for dividend income; the following list of options should provide something that fits in most portfolios.
Our best dividend ETFs are listed by yield, from smallest to largest.
1. Vanguard Dividend Appreciation ETF
— Assets under management: $86.6 billion
— Expense ratio: 0.06%, or 60¢ per year on every $1,000 invested
— Dividend yield: 1.7%
The first few ETFs that I’ll highlight today belong on any evergreen list of the best dividend ETFs, but their importance in 2025 is summed up by the Wells Fargo Investment Institute’s outlook on “rethinking investment income” in the year to come:
“U.S. large-cap companies have accumulated over $2.4 trillion in cash on their balance sheets and could choose to initiate or increase dividend payouts,” the WFII says. “When selecting companies for dividend income potential, we favor those that offer a sustainable stream of income and high-quality balance sheets.”
A search for companies in this vein starts with the Vanguard Dividend Appreciation ETF (VIG). It’s the largest dividend ETF by assets, and it’s one of the cheapest dividend funds, too. But unlike most dividend ETFs where dividend yield is the point, VIG focuses on dividend growth—which not only delivers more cash to shareholders’ accounts, but is considered a sign of corporate-financial quality.
Related: 5 Best Vanguard Dividend Funds [Low-Cost Income]
This Vanguard index fund is benchmarked to the S&P U.S. Dividend Growers Index, which holds stocks that have consistently improved their payouts every year for at least 10 consecutive years. (Interestingly, the index excludes the 25% highest-yielding companies that would be eligible to be in the index.)
Currently, VIG holds roughly 340 top dividend stocks in the U.S., led by tech giants Apple (AAPL) and Broadcom (AVGO), mega-bank JPMorgan Chase (JPM), and integrated energy major Exxon Mobil (XOM). It’s also weighted by size, which means the bigger the stock, the more influence it has on the portfolio. Those four companies I just mentioned? They represent 15% of the portfolio!
The upside? These are very stable, decent-paying stocks. The downside? The ETF’s yield, while a little bit higher than the S&P 500, isn’t as generous as many of the other dividend ETFs on this list.
Related: The 9 Best Fidelity Index Funds to Buy for 2025
2. iShares Core Dividend Growth ETF
— Assets under management: $29.5 billion
— Expense ratio: 0.08%, or 80¢ per year on every $1,000 invested
— Dividend yield: 2.0%
The iShares Core Dividend Growth ETF (DGRO) is another well-established and cost-effective dividend ETF. And like VIG, it is committed to dividend growth rather than dividend yield.
To be included in DGRO, companies must pay a qualified dividend, boast at least five years of uninterrupted annual dividend growth, and have an earnings payout ratio of less than 75%. (This last number means a company can spend no more than 75% of its profits to pay its dividends.)
Related: 10 Monthly Dividend Stocks to Buy for 2025
It also has another filter similar to VIG in that, prior to screening its available universe of stocks for dividend growth and payout ratio, it excludes the top 10% of dividend yields. The takeaway? DGRO tries to hold dividend growers that aren’t falling apart and stretching to afford their distributions.
About 415 stocks make the cut, with the typical mega-cap names at the top of the list. That includes tech stocks like Apple and Microsoft (MSFT) that might not have particularly generous yields right now, but that are likely to bolster their payouts in the years to come.
This ETF also doesn’t have a high current dividend yield, but investors who plan to buy and hold for many years could see the income payments grow significantly over time.
Related: The 7 Best Vanguard ETFs for 2025 [Build a Low-Cost Portfolio]
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3. ProShares S&P 500 Aristocrats ETF
— Assets under management: $11.8 billion
— Expense ratio: 0.35%, or $3.50 per year on every $1,000 invested
— Dividend yield: 2.0%
Of course, there’s dividend growth, and there’s dividend growth—and the ProShares S&P 500 Aristocrats ETF (NOBL) focuses solely on the latter.
This dividend ETF invests in the S&P 500 Dividend Aristocrats, which are an elite group of stocks that have upped the ante on their payouts for at least 25 consecutive years. How long is 25 years? That covers not just the COVID-19 pandemic and war in Ukraine, but also the Global Financial Crisis of 2008 … and even the dot-com boom and bust in 1999-2000!
Related: 7 Best High-Dividend ETFs for Income-Minded Investors
More impressive still? NOBL holds stocks that have raised their dividends for even longer periods of time, including a number of Dividend Kings that have hit the half-century mark.
This Dividend Aristocrats ETF has a tight portfolio of fewer than 70 holdings. And like with other dividend ETFs that mostly focus on payout growth, NOBL doesn’t offer a very large payday. Still, if you want to prioritize stability and consistency in your dividend payments, this fund is worth a look.
Related: 10 Best Dividend Stocks to Buy [Steady Eddies]
4. Utilities Select Sector SPDR Fund
— Assets under management: $16.8 billion
— Expense ratio: 0.09%, or 90¢ per year on every $1,000 invested
— Dividend yield: 2.7%
If you’re more concerned about high current yield rather than dividend growth, the rest of the funds on my list will be more to your taste.
Wall Street prognosticators are widely favorable on utility stocks heading into 2025—even when they don’t quite agree on where the market itself is going.
For instance, JPMorgan and Argus Research, which both see double-digit gains for the S&P 500 in 2025, are favorable on the sector, with the latter noting that utes are “forecast to see more moderate earnings growth but to remain above the long-term average.” However, Stifel—a research firm with the rare view that the market will actually slip in the year to come—prefers utilities for their defensive properties and value proposition.
Amid all of this is a new growth driver for utilities: data centers and artificial intelligence. Morgan Stanley Research Analyst Dave Arcaro says “data centers are having a significant impact on the industry already” and that “powering [generative AI] will be the dominant investment theme next year.”
Related: 8 Best Stock Picking Services, Subscriptions, Advisors & Sites
The best way to get this exposure is an oldie but a goodie: the Utilities Select Sector SPDR Fund (XLU).
The XLU is an index fund that holds all utility-sector stocks in the S&P 500, which includes electric, gas, and water utilities; multi-utilities; and independent power and renewable electricity producers. Right now, that’s a roughly 30-stock set of names including NextEra Energy (NEE), Southern Co. (SO), and Duke Energy (DUK).
Naturally, if you buy a sector ETF, you run the risk of the entire fund’s portfolio struggling if the sector itself falls on hard times. But in XLU, there’s also some significant single-stock risk—the aforementioned names account for more than a quarter of XLU’s weight, including more than 12% for NEE alone.
But you’re also receiving a bit of compensation in the form of above-average dividends. Utilities tend to be one of the highest-yielding sectors, and right now, SPDR’s utility ETF doles out more than twice the yield of the S&P 500.
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Related: Best ETFs to Buy for a Prosperous New Year
5. Schwab U.S. Dividend Equity ETF
— Assets under management: $63.9 billion
— Expense ratio: 0.06%, or 60¢ per year on every $1,000 invested
— Dividend yield: 3.3%
You might not want to put all of your chips into one sector. That’s OK—you can still get an above-average level of yield across several market sectors with high-yield dividend ETFs like the Schwab U.S. Dividend Equity ETF (SCHD).
While SCHD doesn’t explicitly target dividend growth, that doesn’t mean it’s throwing quality out the window. To be included in the fund’s tracking index, the Dow Jones U.S. Dividend 100, a company must have 10 consecutive years of dividend payments, have a float-adjusted market capitalization of at least $500 million, and meet minimum liquidity criteria. The index then selects stocks based on four metrics: cash flow to total debt, return on equity, dividend yield, and five-year growth rate.
Related: The Best REITs to Invest In for 2025
SCHD implements a few other controls to prevent excessive single-stock and even single-sector risk, including a modified market-cap weighting, a 4% weighting cap on individual stocks, and a 25% weighting cap on sectors. The index rebalanced quarterly to keep those portfolio caps tight, and its holdings are reviewed once a year.
The result is a basket of roughly 100 large-caps with pretty decent yields, including the likes of Cisco Systems (CSCO), BlackRock (BLK), and Bristol-Myers Squibb (BMY). At the moment, the portfolio is heaviest in financials (18%), health care (16%), and consumer staples (14%)—historically dividend-friendly sectors.
Costs are about as low as you could want, too, at just 0.06%, making it one of the cheapest high-dividend ETFs on offer.
Related: 10 Best Dividend Stocks to Buy
6. Vanguard Real Estate ETF
— Assets under management: $33.6 billion
— Expense ratio: 0.13%, or $1.30 per year on every $1,000 invested
— Dividend yield: 3.7%
One of the best income-producing corners of the markets is real estate, and to tap the potential of properties, we’ll want one of the most popular Vanguard ETFs: the Vanguard Real Estate ETF (VNQ).
As the name implies, this dividend ETF is focused solely on real estate investment trusts (REITs) and related investments. So, the companies in this fund own all sorts of real estate—from office buildings and apartments to hotels and even driving ranges. Currently, top holdings include industrial property and warehouse owner Prologis (PLD), telecom infrastructure company American Tower (AMT), and other real estate investments. (Though if you check out the provider site, you’ll see that VNQ’s largest allocation is to the Institutional Plus shares of the Vanguard Real Estate II Index Fund, which is itself a basket of REITs that’s extremely similar to VNQ.)
Related: 9 Best Real Estate Crowdfunding Sites + Platforms
REITs are required to pay out at least 90% of their profits to shareholders, which they do in exchange for favorable tax treatment. As a result, real estate tends to be one of the highest-yielding sectors; VNQ’s nearly 4% yield is roughly triple that of the S&P 500.
And like with XLU, keep in mind that while this dividend ETF is highly diversified, at about 160 REITs, these businesses are in many ways interrelated. That means putting your money into this fund exposes you to any volatility from the real estate industry.
Related: 7 Best Banks for Real Estate Investors + Landlords
7. iShares International Select Dividend ETF
— Assets under management: $3.9 billion
— Expense ratio: 0.49%, or $4.90 per year on every $1,000 invested
— Dividend yield: 6.1%
Right now, if you want a yield of 4% or more, it’s difficult to find that in dividend ETFs without looking overseas. Indeed, most of the highest-yielding equity ETFs are either international or global (U.S. plus international).
International dividend stocks are a slightly different animal. They often pay less frequently than U.S. dividend stocks—maybe once or twice a year instead of each quarter. Their payouts typically fluctuate more based on seasonal profitability of the companies as well as currency exchange rates. They’re taxed differently, too. But as you can see by the yield of the iShares International Select Dividend ETF (IDV), international stocks tend to be more generous as a group.
Related: 5 Best Vanguard Dividend Funds [Low-Cost Income]
This roughly 100-stock dividend ETF’s portfolio includes the world’s largest and most established firms. This includes $80 billion consumer company British American Tobacco (BTI) and $70 billion Italian utility giant Enel. The U.K. is the most heavily weighted country at nearly a quarter of assets, though Italy, Spain, Canada, and several other countries also have prominent positions in this ETF.
If you yearn for higher yield and want to diversify your portfolio to include international stocks, IDV does the trick.
Related: The 7 Best Closed-End Funds (CEFs) That Yield Up to 11%
8. Global X SuperDividend ETF
— Assets under management: $746.9 million
— Expense ratio: 0.58%, or $5.80 per year on every $1,000 invested
— Dividend yield: 11.0%
“No no,” you say. “Where are the really high yields?”
OK. You asked for it.
The Global X SuperDividend ETF (SDIV) prioritizes yield above all else, generating a current payout of 11% that’s literally nine times that of the S&P 500, and well more than double the 10-year Treasury yield.
Related: Best ETFs to Buy for a Prosperous New Year
Global X’s fund definitely does not look like most other dividend ETFs.
This is a global fund made up of roughly 100 of the world’s highest-yielding securities. But unlike many global funds, which tend to weight the U.S. at 50% or more, America accounts for only about a third of assets, with Hong Kong (15%), Britain (8%), and Brazil (5%) among the others. Also, SDIV is extremely tilted toward just a handful of sectors—financials (25%), energy (24%), materials (19%), and real estate (18%) make up 85% of the fund!
I hope it goes without saying that the much higher rewards come with much higher risk. SDIV really is all about high dividend yield—but quality simply isn’t as important. The index’s only real quality check is a periodic review for dividend stability (Global X gives this example: “no official announcement as of the Selection Day that dividend payments will be canceled or significantly reduced in the future.”)
In other words: SDIV is good for aggressive investors who want high income. But people looking for stability might want to search elsewhere.
Related: 13 Dividend Kings for Royally Resilient Income
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How Do Dividend ETFs Pay Investors?
When you own an ETF, you own parts of shares of various dividend stocks with different payout schedules. However, you don’t get paid when those stocks pay out—you get paid based on the ETF’s payout schedule.
Dividend ETFs pay their investors the same way as dividend stocks do, with deposits appearing on your brokerage statement on a regular cycle. Some funds—like the Global X SuperDividend ETF (SDIV)—pay you on a monthly cycle. But the majority, including the other six dividend ETFs on this list, all pay on a quarterly schedule, which is similar to most U.S. dividend stocks.
Why Does a Fund’s Expense Ratio Matter So Much?
Every dollar you pay in expenses is a dollar that comes directly out of your returns. So, it is absolutely in your best interests to keep your expense ratios to an absolute minimum.
The expense ratio is the percentage of your investment lost each year to management fees, trading expenses and other fund expenses. Because index funds are passively managed and don’t have large staffs of portfolio managers and analysts to pay, they tend to have some of the lowest expense ratios of all mutual funds.
This matters because every dollar not lost to expenses is a dollar that is available to grow and compound. And over an investing lifetime, even a half a percent can have a huge impact. If you invest just $1,000 in a fund generating 5% per year after fees, over a 30-year horizon, it will grow to $4,116. However, if you invested $1,000 in the same fund, but it had an additional 50 basis points in fees (so it only generated 4.5% per year in returns), it would grow to only $3,584 over the same period.
Related: 7 High-Quality, High-Yield Dividend Stocks
Related: 13 Best Long-Term Stocks to Buy and Hold Forever
As even novice investors probably know, funds—whether they’re mutual funds or exchange-traded funds (ETFs)—are the simplest and easiest ways to invest in the stock market. But the best long-term stocks also offer many investors a way to stay “invested” intellectually—by following companies they believe in. They also provide investors with the potential for outperformance.
So if you’re looking for a starting point for your own portfolio, look no further. Check out our list of the best long-term stocks for buy-and-hold investors.
Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income
The vast majority of American dividend stocks pay regular, reliable payouts—and they do so at a more frequent clip (quarterly) than dividend stocks in most other countries (typically every six months or year).
Still, if you’ve ever thought to yourself, “it’d sure be nice to collect these dividends more often,” you don’t have to look far. While they’re not terribly common, American exchanges boast dozens of monthly dividend stocks.
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