Best Dividend ETFs to Buy Now in 2025

Dividend-focused ETFs can be a beginner investor’s best friend. They offer a simple, diversified way to earn passive income from stocks without the hassle of picking individual companies. In 2025’s market, dividend ETFs are especially attractive – high interest rates and market uncertainty have many investors seeking reliable cash flow and stability.

Below we’ve compiled a list of 5+ top dividend ETFs that are strong buys this year, blending high-yield strategies (for maximum income) with dividend growth approaches (for steadily rising payouts).

1. Schwab U.S. Dividend Equity ETF (SCHD)

• Dividend Yield: ~3.7% (well above the market average)
• Expense Ratio: 0.06% (extremely low cost)
• Number of Holdings: 100 large-cap U.S. stocks
• Strategy: High-quality dividend growth stocks with 10+ year track records, weighted by yield and fundamentals
• 2025 Outlook: Gold-rated by Morningstar for its balance of income and growth – a core dividend powerhouse in any market.

If you’re searching for a one-stop core dividend fund, Schwab’s SCHD could be the MVP of dividend ETFs. SCHD blends high-quality companies with strong dividend histories and solid yields, providing investors with a steady income stream—around 3.7%, nearly double the S&P 500’s yield.

Even better, SCHD comes with an ultra-low expense ratio of just 0.06%, keeping more money in your pocket. Morningstar gives it a Gold rating, calling SCHD’s approach “sensible, transparent, and risk-conscious.” This has helped the fund outperform many benchmarks on a risk-adjusted basis.

What’s Inside SCHD?

SCHD tracks the Dow Jones U.S. Dividend 100 Index, holding 100 of the strongest U.S. dividend stocks. It’s not just about yield; it’s about quality and consistency. To qualify, a company must show at least 10 years of dividend growth and pass screens for cash flow and return on equity.

SCHD scores stocks on factors like yield, dividend growth, cash flow to debt, and ROE, then selects the top 100. This creates a portfolio of blue-chip dividend heroes focused on reliability. Notably, SCHD excludes REITs and MLPs, avoiding high-payout but volatile sectors and sticking to stable corporations with sustainable dividends.

Expect to find household names among SCHD’s top holdings—think Coca-Cola, Verizon, and ConocoPhillips. These are established giants (average market cap over $130 billion) with the cash flow to reward shareholders. The fund is diversified, leaning more toward sectors like energy (21%), consumer staples (19%), and healthcare (16%), while skipping real estate entirely and keeping tech exposure minimal.

Dividend Performance and Returns

SCHD’s yield typically lands around 3.5–4%, outpacing the S&P 500. The dividends come from companies with a decade-long record of raising payouts, so your income can grow over time.

In terms of total returns, SCHD has a reputation for strong performance with lower volatility. Over the past 5–10 years, it delivered average annual returns of 10–12% and often outperformed the market during downturns. For instance, in the 2022 bear market, SCHD’s total return was about -3.5% (including dividends), compared to -18% for the S&P 500.

Of course, SCHD isn’t perfect. Its focus on dividend-payers means it underweights big tech stocks like Apple or Google, so it can lag when tech is booming. It also excludes certain sectors, so you might want to diversify elsewhere. Still, for many investors, SCHD works well as a core equity holding—a nearly “set it and forget it” ETF for dividend seekers.

With minimal fees (just $6 per $10,000 invested), a smart strategy, and a strong track record, SCHD stands out as a top dividend ETF for 2025.

Ideal for: Beginners seeking a solid foundation for their portfolio. If you want an ETF that covers a wide range of quality dividend stocks, pays a strong yield, and requires little maintenance, SCHD is a top choice. It fits well in a long-term retirement or income-focused portfolio, offering moderate risk and a high-quality cushion during market dips.

2. Vanguard Dividend Appreciation ETF (VIG)

• Dividend Yield: ~1.9% (focusing on growth of dividends rather than high yield)
• Expense Ratio: 0.05% (very low)
• Holdings: ~320 stocks with 10+ years of dividend increases (no REITs, excludes highest-yield stocks)
• Strategy: Dividend growth – invests in companies with long, reliable records of raising dividends; avoids risky high-yield outliers
• Investor Profile: Great for buy-and-hold investors who want steady dividend growth and broad diversification. A core equity holding for the long run.

For investors seeking consistency and growth over high current yield, Vanguard’s Dividend Appreciation ETF (VIG) stands out as a perennial favorite. VIG focuses on companies that consistently raise their dividends year after year. To be included, a stock must have increased its annual dividend for at least 10 consecutive years.

This approach means VIG’s holdings are typically rock-solid businesses—think of dividend “aristocrat” types, though VIG’s index is broader than just the S&P 500. These companies might not have huge yields now, but their compounding payouts can really add up for long-term investors.

What’s Inside VIG

VIG tracks the S&P U.S. Dividend Growers Index. This index screens for U.S. companies with at least a decade of rising dividends and sufficient trading liquidity. Notably, REITs (real estate investment trusts) are excluded since they’re tracked separately.

VIG also removes the highest-yielding 25% of stocks that pass the dividend growth screen. The reason: unusually high yields can signal trouble, like a falling stock price or a company in distress. By leaving out these outliers, VIG aims to reduce the risk of “too good to be true” yields.

The result? Over 300 stocks that are profitable, stable, and friendly to shareholders. The ETF is market-cap weighted, so the largest companies—like Microsoft and Apple—carry more influence. Vanguard charges a tiny 0.05% fee, making it one of the cheapest ETFs to own.

Because of its cap-weighting, VIG’s top holdings look like a who’s who of blue-chip leaders. Alongside Microsoft and Apple, you’ll find Broadcom and JPMorgan Chase. Many large tech names are present as long as they pay and grow dividends, though companies like Google or Amazon don’t qualify since they pay no dividends.

Sector-wise, VIG is broadly diversified, similar to the S&P 500 but with a focus on dividend growers. It’s lighter in sectors like energy or utilities, which often have patchy dividend histories, and heavier in areas like industrials and consumer staples.

Yield, Performance & Who VIG Suits Best

VIG’s focus on dividend growth—plus the exclusion of super-high yielders—means its current yield is modest, around 1.9% (just above the S&P 500’s 1.4%). You’re not buying VIG for high income today, but rather for the steady growth of income and capital over time.

Most VIG holdings reinvest profits to grow, while reliably raising dividends—fueling solid long-term returns. Historically, VIG’s performance has tracked closely with the broader market, often balancing growth and income. By steering clear of the highest-yield stocks, VIG tends to include more growth-oriented names.

In strong bull markets led by non-dividend stocks, VIG might lag, and in downturns, it may not defend as well as a pure high-yield ETF. However, it’s shown to be quite resilient and less volatile than a typical growth fund. The companies in VIG are generally financially strong—you don’t find many risky firms that can raise dividends for a decade straight. That can be reassuring for investors concerned about dividend cuts.

For beginners, VIG is a “sleep-well-at-night” equity fund. You know you’re invested in firms with a culture of rewarding shareholders, run by managements confident enough to hike dividends year after year. Plus, you’re diversified across hundreds of names, so no single company dominates the fund.

Costs and Turnover

Like most Vanguard funds, VIG is extremely cheap to own (just 0.05% annually) and passively managed. Holdings only change when the index rebalances, so turnover is minimal. This makes it tax-efficient and low maintenance. It’s also one of the largest dividend ETFs, with over $80 billion in assets.

Who should consider VIG?

Those looking for reliable growth rather than maximum income. If you’re comfortable with a lower current yield, but like owning the best dividend growers, VIG is a smart choice. It’s ideal for long-term goals like retirement or college savings—where you want your dividend stream to be much larger in 10 or 20 years.

Risk-wise, VIG is moderate. It’s essentially an all-large-cap fund, a bit more conservative than the S&P 500 by excluding certain names. It won’t be the hottest performer in any single year, but over time, it’s steady and reliable—think of VIG as the “tortoise” that steadily wins the race.

3. Vanguard High Dividend Yield ETF

• Dividend Yield: ~2.9% (recent) – above average, with potential to rise if stock prices fall
• Expense Ratio: 0.06% (very low cost)
• Holdings: ~590 stocks (large & mid-cap, ex-REITs), cap-weighted
• Strategy: High dividend yield focus – holds a broad portfolio of U.S. companies with above-average yields, while avoiding extreme outliers
• Notable: Highly diversified across sectors; top holdings include well-known blue chips (JPM, XOM, JNJ, etc.). Gold-rated by Morningstar as a top choice for dividend exposure.

Next up is Vanguard’s High Dividend Yield ETF (VYM), a popular choice for those seeking a diversified basket of high-paying dividend stocks with minimal fuss. VYM delivers exactly what its name suggests: it targets stocks with above-average dividend yields, offering investors higher income than a standard market index.

Currently, VYM yields around 2.9%, noticeably higher than the S&P 500’s ~1.5%. It does this by focusing on large, stable companies while maintaining extremely low costs (0.06% expense ratio). For a no-frills, high-yield equity fund from a trusted provider, VYM stands out.

Portfolio and Strategy

VYM tracks the FTSE High Dividend Yield Index, which features the highest-yielding large and mid-cap U.S. stocks. Notably, it excludes REITs to avoid overconcentration in real estate, a sector with naturally high payouts. This keeps VYM focused on traditional corporations with strong dividend histories.

The fund includes roughly the top half of dividend payers from its universe, weighted by market cap. Right now, VYM holds about 590 stocks, making it extremely well-diversified—essentially, it’s the higher-yielding half of the U.S. stock market.

VYM’s holdings heavily overlap with a standard index, but tilt more toward dividend payers. Top holdings typically include JPMorgan Chase, ExxonMobil, Johnson & Johnson, and Procter & Gamble—all blue-chip companies known for rewarding shareholders. Sector-wise, VYM’s largest weights are in financials (about 20%), followed by health care (~14%), industrials (~13%), and consumer staples (~11%). It’s also fairly balanced across other sectors, including consumer discretionary (~10%) and energy (~9%). Big tech names that pay dividends (like Microsoft) are included, but pure growth companies without dividends (like Tesla or Meta) are not.

Defensive Income in Uncertain Times

VYM delivers a portfolio similar to the broad market, but with an income twist. By excluding REITs and non-dividend payers, its risk profile is often a bit lower than the total market—dividend-paying companies tend to be profitable and more mature, and the fund avoids some of the most volatile names.

Looking ahead to 2025, with concerns about an economic slowdown or recession, dividend stocks like those in VYM may become more attractive. When growth slows, investors often seek out reliable dividend income. As Kiplinger notes, investors tend to flock to dividend payers in weaker markets, and VYM could benefit from this shift. Vanguard’s fund holds a Gold Morningstar Medalist rating for its blend of yield, quality, and low cost.

Performance and Yield:

VYM’s yield hovers near 3%, but this can change with the market. Historically, it’s delivered solid total returns—sometimes trailing the broad market during big bull runs (since high-dividend sectors grow more slowly), but often outperforming in down markets thanks to its defensive tilt. Over the long run, reinvested dividends can make returns competitive with growth stocks. For income-focused investors, a 3% yield that grows over time is a major draw.

Keep in mind, VYM is market-cap weighted, so mega-caps dominate the top holdings. The largest 10 stocks may account for 20-25% of the fund, similar to other broad indexes. Occasionally, the yield screen may include companies with high yields due to price drops rather than strong fundamentals, but the fund’s broad diversification (nearly 600 stocks) helps limit risk from any single name.

Who Should Consider VYM?

For beginners, VYM is attractive for its simplicity and broad diversification. You’re getting a wide slice of the U.S. equity market, but with more focus on value and dividend traits. There’s no complex strategy—just high-yield stocks, market-cap weighted. You can pair VYM with a growth fund for balance, or use it alone for equity income.

Ideal for: Investors seeking higher income from stocks while maintaining broad market exposure. If you appreciate Vanguard’s low-cost indexing and want a fund that leans toward value and dividends, VYM is a great fit. It works well for long-term portfolios, IRAs, or even taxable accounts (since VYM’s low turnover helps limit capital gains taxes). Risk level is moderate—it will move with the stock market, but tends to have a bit less volatility than pure growth funds. It’s a classic option for retirees who want income plus some growth potential.

4. SPDR S&P Dividend ETF (SDY)

• Dividend Yield: ~2.6% (higher than broad market, with 25-year dividend growth requirement)
• Expense Ratio: 0.35%
• Holdings: ~120 stocks, drawn from S&P 1500 with 25+ years of dividend increases, weighted by yield
• Sector Tilt: Heavy in industrials, staples, utilities (~17% each); minimal tech/energy exposure. Very diversified across many small positions.
• Why Buy: Combines dividend longevity + decent yield. Historically strong in down markets, Silver-rated by Morningstar as a reliable income fund for the long haul.

If consistency is king for you as a dividend investor, SDY (SPDR S&P Dividend ETF) deserves a spot on your radar. SDY is built around the well-known “dividend aristocrats” concept—companies that have raised their dividends for at least 25 consecutive years—but it adds a twist by focusing on higher yields.

Specifically, SDY tracks the S&P High Yield Dividend Aristocrats Index. This index pulls its members from a broader universe than just the S&P 500, resulting in a portfolio of battle-tested dividend payers that offer yields above the market average. SDY currently yields about 2.6% and has a reputation for being a stable, downside-resistant fund over the long run.

What Makes SDY Unique

Let’s break down the index: The S&P 500 Dividend Aristocrats index (tracked by another ETF, NOBL) includes S&P 500 companies with 25+ years of dividend hikes. SDY’s index casts a wider net by drawing from the S&P Composite 1500, which includes large, mid, and small-cap stocks. It applies the same 25-year dividend growth requirement and weights the stocks by dividend yield, rather than size.

This approach means SDY leans more toward higher-yielding aristocrats, whereas NOBL equally weights them. Because of this, SDY often has a slightly higher yield than some other dividend growth funds, while still focusing on dependable dividend growers.

After 25 years of consecutive dividend increases, you won’t find many fly-by-night companies in SDY’s portfolio. These are mature, established firms, often with defensive business models. Top holdings recently included names like Verizon Communications, Realty Income (a REIT known for steady monthly dividends), and Consolidated Edison.

Unlike some other dividend ETFs, SDY does include REITs if they meet the criteria. You’ll see sectors like industrials, consumer staples, and utilities heavily represented, each making up around 17-18% of the portfolio. Financials also have a decent allocation (about 10%). SDY has very little exposure to sectors like tech or communication services, as few companies in those industries have 25+ years of dividend increases.

The sector tilt isn’t necessarily a downside—these sectors are typically the most reliable dividend payers. However, it’s important to know that SDY is not a mirror of the broad market. Instead, it represents a quality income slice of it.

Performance, Yield, and Suitability

Morningstar analysts note that SDY “has delivered stellar lifetime results by protecting the downside.” The mature companies in this portfolio usually generate stable returns, especially when markets are shaky. When the market drops, these stocks typically fall less, and their dividends cushion returns. Since its index launched in 2005, SDY has offered competitive returns with lower volatility.

In strong bull markets led by high-growth stocks, SDY may lag behind the S&P 500. It won’t own fast-growing names like Tesla or Netflix, since they don’t have the required dividend history. Even among aristocrats, SDY gives more weight to higher yielders, which sometimes means slower growth. So don’t expect SDY to beat the S&P 500 every year. However, over full market cycles, it’s been very solid.

The fund balances dividend growth with above-average yield—a combination many funds don’t offer. SDY delivers a current yield (2.5–3%) higher than the market, plus exposure to companies with a track record of growing dividends, which often signals underlying financial strength.

SDY holds around 120 stocks, and no single stock dominates. The largest position is typically only about 3% of assets, making the fund well-diversified at the stock level. The expense ratio is 0.35%, a bit higher than ultra-cheap funds like SCHD or VYM, but you’re paying for a specialized index.

Who is SDY best for? It’s ideal for those who value consistency and quality of dividends. SDY suits investors who want companies that reward shareholders reliably, and are willing to trade some growth potential for that stability. Retirees or conservative investors often favor SDY for its strong downside protection, helping to “lose less” in bear markets while still capturing income and some upside in bull markets.

If you pair SDY with a broader fund, it can bring stability to your portfolio. Just remember the sector tilts—you may want to balance SDY with some tech or growth exposure elsewhere.

5. JPMorgan Equity Premium Income ETF (JEPI)

• Dividend Yield: ~7–8% (paid monthly; may vary, but consistently high)
• Expense Ratio: 0.35%
• Holdings: ~100–120 stocks (actively managed, tilted to low-volatility large caps) + equity-linked note (option) positions
• Strategy: Covered call / income – combines a stock portfolio with selling options for premium. Aims for high income & lower volatility rather than max growth.
• Ideal Use: Income generation in a portfolio. Suitable for those who want cash flow now and are okay capping some upside. Often used in retirement accounts or alongside other equity funds for balance.

So far, we’ve covered traditional dividend ETFs, but now let’s look at an innovative income-focused ETF that’s been making waves: JEPI. The JPMorgan Equity Premium Income ETF (JEPI) stands out because it doesn’t just buy dividend stocks—it also uses an options strategy to generate extra income. The main goal? Deliver a high yield (recently around 7–8%) with a smoother ride than the stock market.

In plain English, JEPI aims to provide “stock market income without full stock market volatility.” It’s become very popular among investors seeking monthly income in a low-yield environment, growing to over $39 billion in assets.

How JEPI Works

JEPI holds a diversified portfolio of large-cap U.S. stocks, broadly similar to S&P 500 companies, but also uses an options overlay. Up to 20% of the fund is invested in equity-linked notes (ELNs) that generate income by selling call options on the S&P 500 Index. The premiums from these call options are collected and passed to shareholders as dividends.

Essentially, JEPI trades some upside potential for immediate income. This means you get a steady distribution every month, but in a roaring bull market, JEPI’s gains are capped due to the options sold.

To put it simply: Imagine owning a bunch of solid stocks, plus running a side business selling insurance (options) to other investors. They pay you premiums, and you give up some gains if the market soars. JEPI does all this automatically for you.

This strategy has delivered high income and lower volatility. In 2022’s down market, JEPI slipped only about 3.5% while the S&P fell 18%. That’s a strong result for capital preservation. Of course, in a big rebound like 2023, JEPI lagged behind the S&P’s double-digit gains because of its capped upside. Still, many investors are happy to trade some growth for reliable income.

Yield, Performance, and Portfolio

JEPI’s yield fluctuates since option premiums change with the market, but it’s typically around 7% (some sources show 7.1%, others 8%). That’s much higher than typical stock yields. The fund pays dividends monthly, usually in the range of $0.30–$0.60 per share. Distributions can move up or down, but they’ve been steady overall.

The total return (income plus price change) will likely lag pure equity funds in big bull runs, but over a full cycle, it can compete well—especially if you reinvest the income.

JEPI’s stock holdings are actively managed by J.P. Morgan’s team. They favor lower-volatility, value-oriented stocks for stability. Recent top holdings included Visa, Mastercard, Progressive Corp, Trane Technologies, and Southern Co. There are small weights to big tech like Meta or Amazon, but the core is quality blue-chips from various sectors.

The options (ELNs) part is less transparent, as they are contracts with counterparties tied to the S&P 500’s performance. Still, the fund’s goal is clear: steady income and reduced volatility.

Risks and Considerations

JEPI’s strategy means you sacrifice some upside. If the market soars, JEPI’s returns will be limited because the calls it sold get exercised. For example, if the S&P 500 jumps 30% in a year, JEPI might only capture part of that—but you’ll still receive strong income.

Conversely, in flat or down markets, JEPI’s options income cushions returns. It’s a classic low-volatility, lower-upside approach—though JEPI can still lose money in a bear market, just usually less. Also, JEPI’s dividends are taxed partly as ordinary income or option gains, not just qualified dividends—important for taxable accounts (many hold JEPI in an IRA).

JEPI’s expense ratio is 0.35%, which is reasonable for an active, income-focused ETF. Given the income, most investors see this fee as worth it, and it’s lower than many other option-income funds.

JEPI has become a favorite in the income investing community. It’s rare to find near-8% yield from blue-chip equities with managed risk. As one writer put it, “it’s working”—JEPI delivered in the 2022 sell-off and since. But remember, if the market rallies non-stop, JEPI will underperform—though you’ll still get paid each month.

Ideal For: JEPI is well-suited for income-focused investors who want high cash flow with less volatility than the stock market. This makes it great for retirees or anyone seeking to monetize market ups and downs. It’s a solid choice if you’re willing to give up some upside for a smoother ride. Beginners should understand the strategy: it’s not a traditional dividend fund, but an enhanced-income fund. As long as expectations are set (you won’t beat the S&P in a bull rally), JEPI can be a powerful tool—especially when paired with growth funds for balance.

6. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)

Key Stats – SPHD:

• Dividend Yield: ~3.5% trailing; SEC yield near 5% recently (forward yield in the 4%+ range); paid monthly
• Expense Ratio: 0.30%
• Holdings: 50 stocks (S&P 500 subset: highest yield + lowest volatility)
• Sector Focus: Heavy in utilities, real estate, and staples (defensive, stable sectors); light on tech, healthcare, etc.
• Strategy Goal: High yield, lower volatility than the market—good for conservative income investors.

For a more traditional approach to juicing yield with a defensive tilt, SPHD (Invesco S&P 500 High Dividend Low Volatility ETF) stands out. SPHD picks 50 stocks from the S&P 500 that combine high dividend yields with low historical volatility. Simply put, it targets companies that pay well and have stock prices that don’t swing too wildly. The goal is to offer above-average income with potentially lower risk than most high-yield funds. SPHD also pays dividends monthly, which many income investors like for budgeting.

How SPHD Selects Stocks

SPHD’s selection process is straightforward. It starts by ranking all S&P 500 stocks by dividend yield and takes the top 75. From those, it picks the 50 with the lowest price volatility over the last 12 months. These 50 stocks make up the portfolio, weighted by yield (with caps to prevent overconcentration). The index is rebalanced twice a year.

This approach tends to favor sectors like utilities, consumer staples, and sometimes telecom or real estate. These areas often have both high yields and steady stock prices. On the flip side, sectors like tech or biotech usually get less weight due to lower yields or higher volatility.

Current Portfolio and Sector Breakdown

As of the latest data, SPHD’s dividend yield is around 3.4% (trailing 12 months), but its SEC 30-day yield was recently close to 5%, suggesting the forward yield is likely 4% or higher. The portfolio skews toward defensive, high-yield names—think utility companies, REITs, and consumer staples. Past top holdings have included Iron Mountain (a REIT), Altria (tobacco), AT&T (telecom), and various utilities.

One important note: SPHD’s sector allocation can be a bit concentrated. Utilities, real estate, and staples can sometimes make up close to half the fund or more. So while you get a basket of 50 stocks, it’s not as diversified across all sectors as funds like VYM or SCHD. That’s the trade-off for the low-volatility filter.

Performance and Use Case

Historically, SPHD delivers steady income but trails on growth. Its total returns have lagged broader indexes like SCHD or the S&P 500, especially over longer periods. For example, over 5–10 years, SPHD’s annual returns were in the mid-single digits, while the S&P 500 and SCHD hit double digits. This is mainly because SPHD leans heavily on slow-growth sectors and misses out on booming ones like tech.

However, in rough markets, SPHD tends to hold up better due to its low volatility focus. Its beta is around 0.8–0.85, so if the market drops 10%, SPHD might only fall around 8%. It isn’t immune, but it can cushion the blow.

Many investors use SPHD as a yield booster in their portfolio, knowing that price appreciation may be more muted. For those needing regular income, the monthly dividend payments are a practical feature—making cash flow management easier than funds that pay quarterly.

SPHD’s expense ratio is 0.30%. That’s a bit higher than broad funds but reasonable for a smart-beta strategy. With about $3 billion in assets, it’s a well-established ETF.

Risks and Considerations

Because of its approach, SPHD can sometimes hold “value traps”—stocks with high yields because their prices dropped for a good reason (like a business decline). The low-volatility screen helps filter out the worst cases, but it’s not perfect. Occasionally, SPHD may own a stock that cuts its dividend, which can hurt returns. Also, the sector concentration means if defensive sectors underperform, SPHD may lag the market.

Invesco includes rules to reduce concentration risk, such as capping any sector at 25% during rebalancing. This prevents overexposure if yields shift within sectors.

Best For: SPHD is ideal for investors seeking higher yield than the broad market, with potentially smoother performance, and who don’t mind a heavier tilt to defensive sectors. It can act as the “income engine” in a dividend portfolio, while a growth fund or SCHD serves as the “growth engine.” The monthly income is especially useful for those who want to pay bills from their investments.