High Yield or Dividend Growth? Best ETFs for 2024 #bestetf

Finding the best dividend exchange-traded funds (ETFs) can significantly optimize your portfolio’s performance by achieving the best risk-adjusted returns. Dividend ETFs are categorized into high-dividend yield ETFs and dividend appreciation ETFs. High-dividend yield ETFs typically track indexes focusing on stocks with the highest yields, while dividend appreciation ETFs prioritize companies with a history of steadily increasing their dividends.
For 2024, we've screened multiple high-dividend yield ETFs and dividend appreciation ETFs based on various criteria, including management style, expense ratios, dividend yields, ratings, and total assets. ETFs with high turnover rates and annual yields of less than 1.75% didn’t make the cut.
The best dividend ETFs for 2024 include the Schwab U.S. Dividend Equity ETF (SCHD), Vanguard High Dividend Yield ETF (VYM), WisdomTree U.S. LargeCap Dividend Fund (DLN), ProShares S&P 500 Dividend Aristocrats ETF (NOBL), and iShares Core Dividend Growth ETF (DGRO). Each of these ETFs offers unique benefits, ranging from high yields to solid growth prospects.
The Schwab U.S. Dividend Equity ETF (SCHD) stands out with an expense ratio of just 0.06% and total assets of $53.9 billion. Its rigorous index methodology and high Morningstar rating make it a top pick. Vanguard High Dividend Yield ETF (VYM) also boasts a low expense ratio of 0.06% and total assets of $52.5 billion, making it a strong contender.
WisdomTree U.S. LargeCap Dividend Fund (DLN) offers a 10.73% 10-year annualized return with an expense ratio of 0.28%. ProShares S&P 500 Dividend Aristocrats ETF (NOBL) provides a 10.89% return over the same period with an expense ratio of 0.35%. iShares Core Dividend Growth ETF (DGRO) focuses on companies with strong dividend growth potential and has an expense ratio of 0.08%.
SPDR S&P Dividend ETF (SDY) targets mid-value stocks and has an expense ratio of 0.35%, with total assets of $20.1 billion. WisdomTree U.S. Quality Dividend Growth Fund (DGRW) shows a 12.88% 10-year annualized return and an expense ratio of 0.28%, highlighting its strong performance.
Comparing these ETFs, the Vanguard High Dividend Yield ETF (VYM) and Schwab U.S. Dividend Equity ETF (SCHD) are particularly noteworthy for their low costs and robust asset bases. ProShares S&P 500 Dividend Aristocrats ETF (NOBL) and WisdomTree U.S. Quality Dividend Growth Fund (DGRW) offer compelling returns, while iShares Core Dividend Growth ETF (DGRO) focuses on growth.
Dividend ETFs are an excellent core holding in an income-oriented investment portfolio, offering greater simplicity, accessibility, and diversification compared to individual dividend stocks. Investors should focus on strategies, holdings, and expense ratios when comparing dividend ETFs instead of solely chasing yields. Understanding the difference between U.S. and international holdings, high yields versus dividend growth, and equity styles will help you find the right ETF.
Our recommendation for the best overall dividend ETF is the Schwab U.S. Dividend ETF (SCHD), thanks to its combination of high Morningstar rating, rigorous index methodology, low expense ratio, competitive yields, and strong historical performance.
A dividend ETF is a fund that holds a portfolio of different dividend stocks based on a methodology. Like stocks, dividend ETFs trade on an exchange throughout the day and can be purchased via various brokerage services. Dividend ETFs can be actively or passively managed and hold U.S. or international dividend stocks.
Diving deeper, there are variations in the objectives of dividend ETFs. Some prioritize high yields, seeking to provide investors with substantial, regular income. These can be particularly appealing when interest rates are low. However, a higher yield sometimes flags higher risks, which might indicate that the market believes the dividend is not sustainable.
On the other hand, some ETFs emphasize dividend growth. Rather than going for the immediate high yield, they zero in on companies with a history of steadily increasing their dividends over the years. Such companies often portray greater stability and robust financial health but may not have the highest present yields.
Investing in dividend ETFs mirrors investing in any other ETF. The journey starts with opening a brokerage account. Once you’ve opened and funded your account, you can search for the dividend ETF of your choice by entering its ticker symbol.
When you’re ready to purchase, you specify the number of shares you wish to buy and the type of order – a market order, which buys at the current price, or a limit order, where you set a specific price you’re willing to buy. After confirming all details, you submit the order.

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