Best Dividend ETFs

Dividend exchange-traded funds package a diversified basket of income-paying securities into a single holding. For most investors building an income portfolio, one broad dividend ETF does the job of thirty individual positions with a fraction of the research and rebalancing effort, and without the single-company risk that a dividend cut represents.

The funds on this list differ more than their similar names suggest. Some track high-yield indices that select purely on current yield, which maximises income but tends to concentrate in a few sectors and to hold companies whose share prices have fallen. Others track dividend-growth indices that select on consecutive years of increases and screen for financial quality, which produces a lower headline yield and a steadier one. A third group writes covered calls to manufacture additional distribution income, trading away some upside for a much higher payout.

Yield alone will not tell you which of those you are buying, so treat this ranking as a starting point and read the fund's own methodology before committing. Expense ratios also matter more for funds than the yield differences between them often do.