It’s hard to beat dividend-paying stocks — in part because they tend to increase their payouts regularly.
So you’ve got $2,000 to invest — or perhaps $20,000 or more. Where should you invest it? I’d like to suggest some dividend-focused exchange-traded funds (ETFs) — funds that trade like stocks. Each is invested in a range of dividend-paying stocks.
It’s hard to beat dividend-paying stocks because healthy and growing ones offer three ways to profit:
- Their stock price will likely appreciate over time
- They will deliver income via dividends.
- Their dividends will likely increase over time.
Image source: Getty Images.
Why dividends?
If you’re not yet sold on the idea of dividends, check out the table below:
|
Dividend-Paying Status |
Average Annual Total Return, 1973-2024 |
|---|---|
|
Dividend growers and initiators |
10.24% |
|
Dividend payers |
9.20% |
|
No change in dividend policy |
6.75% |
|
Dividend non-payers |
4.31% |
|
Dividend shrinkers and eliminators |
(0.89%) |
|
Equal-weighted S&P 500 index |
7.65% |
Data source: Ned Davis Research and Hartford Funds.
Clearly, dividend payers can be powerful contributors to your portfolio’s growth.
Seven attractive dividend ETFs
There are more than a few solid income-producing ETFs out there. You’ll find seven of them below — including a simple S&P 500 index fund and an ETF focused on preferred stocks, which tend to feature high dividends but little stock-price appreciation.
|
ETF |
Recent Yield |
5-Year Avg. Annual Return |
10-Year Avg. Annual Return |
15-Year Avg. Annual Return |
|---|---|---|---|---|
|
iShares Preferred & Income Securities ETF (PFF 0.42%) |
6.63% |
1.71% |
3.53% |
4.39% |
|
State Street SPDR Portfolio S&P 500 High Dividend ETF (SPYD 0.02%) |
4.46% |
9.96% |
9.01% |
N/A |
|
Schwab U.S. Dividend Equity ETF (SCHD +0.00%) |
3.74% |
8.56% |
11.46% |
N/A |
|
Fidelity High Dividend ETF (FDVV 0.75%) |
3.02% |
16.03% |
N/A |
N/A |
|
iShares Core Dividend Growth ETF (DGRO 0.47%) |
1.98% |
11.72% |
13.03% |
N/A |
|
Vanguard Dividend Appreciation ETF (VIG 1.06%) |
1.59% |
11.70% |
13.10% |
12.36% |
|
Vanguard S&P 500 ETF (VOO 1.08%) |
1.12% |
14.91% |
14.76% |
14.17% |
Source: Morningstar.com, as of December 9, 2025.
Here are a few words about some of these funds:
The iShares Preferred & Income Securities ETF
While most dividend-focused ETFs are invested in shares of regular, common stock, this ETF is invested in preferred stock. Preferred stock tends to feature fixed dividends as opposed to dividends that grow every year or so, but its payouts tend to be fairly generous.
iShares Preferred and Income Securities ETF
Today’s Change
(-0.42%) $-0.13
Current Price
$31.02
Key Data Points
Day’s Range
$30.98 – $31.17
52wk Range
$28.70 – $32.28
Volume
4.3M
The Schwab U.S. Dividend Equity ETF
The Schwab U.S. Dividend Equity ETF is one of my favorite dividend-focused ETFs. It tracks the Dow Jones U.S. Dividend 100 index, which holds about 100 stocks with track records of paying dividends for at least 10 years — and which also tend to be tied to high-quality companies. It offers a great mix of both a very respectable dividend yield and a solid performance record — and it has increased its payout for many years. Top holdings recently were Merck, Cisco Systems, and Amgen.
Schwab U.S. Dividend Equity ETF
Today’s Change
(0.00%) $0.00
Current Price
$27.68
Key Data Points
Day’s Range
$27.61 – $27.81
52wk Range
$23.87 – $28.84
Volume
3.2K
The Vanguard Dividend Appreciation ETF
The Vanguard Dividend Appreciation ETF is another standout dividend ETF, tracking the S&P U.S. Growers index, which is focused on companies that have increased their dividend for at least 10 consecutive years. It also excludes stocks with very steep yields, as a high yield can be due to a depressed stock price and a struggling company. It recently held about 338 different stocks, with top holdings including Broadcom, Microsoft, and Apple.
Vanguard Dividend Appreciation ETF
Today’s Change
(-1.06%) $-2.37
Current Price
$222.08
Key Data Points
Day’s Range
$221.47 – $223.75
52wk Range
$169.32 – $224.59
Volume
10
I also included the Vanguard S&P 500 ETF in the group because, while it’s not technically dividend-focused, it does pay a dividend, as many of its 500 components are dividend payers. You can get much more income via other ETFs, but this one might serve you well, too, offering the chance of greater share-price appreciation. Remember, though, that it’s a bit top-heavy with tech stocks, and they may fall harder if and when there’s a market pullback.
So consider any or all of these income-producing ETFs, and consider spreading your dollars across several of them.
Selena Maranjian has positions in Amgen, Apple, Broadcom, Microsoft, and Schwab U.S. Dividend Equity ETF. The Motley Fool has positions in and recommends Amgen, Apple, Cisco Systems, Merck, Microsoft, Vanguard Dividend Appreciation ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.