In this article, we discuss 10 best dividend ETFs.
Investing in exchange-traded funds (ETFs) is a good investment strategy for many investors as they offer several advantages, including diversification, liquidity, and typically lower expense ratios compared to mutual funds. They provide access to a wide range of asset classes, from stocks and bonds to commodities and real estate, allowing investors to create a diversified portfolio that aligns with their financial goals and risk tolerance. While ETFs have grown significantly in popularity and their assets have increased substantially in recent years, they still represent only a fraction of the total global financial market. According to a report by iShares, ETFs in the US represent 12.6% of equity assets. In Europe, they account for roughly 8% of stock investments, and in the Asia-Pacific region, they represent approximately 4.2% of stock investments.
That said, investors often prefer ETFs because they offer easy and convenient solutions for investing. Investors seeking income and stability in their portfolios gravitate toward dividend-focused ETFs. These funds provide a consistent stream of income through dividends paid by the underlying stocks. Additionally, many dividend ETFs focus on companies with a history of dividend growth, offering the potential for income to increase over time, which can help protect against inflation. In one of our articles on the subject published in May this year, we mentioned that there are around 180 dividend ETFs in the US, and these ETFs have a combined value of more than $384 billion.
Also read: 10 Best Performing Small-cap ETFs in 2023
Most dividend ETFs follow one of two strategies. The first group invests in stocks that offer high dividend payments. The second group, on the other hand, concentrates on stocks known as dividend-growth stocks. These stocks may not have extremely high dividend yields, but they come from financially stable companies that have consistently increased their dividend payments over time. Because of this, dividend-growth stocks typically show some strength during market downturns and economic slowdowns. We have previously covered various aspects of dividend growth stocks and reported that companies with strong dividend growth track records outperformed because of the compounding effect.
The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) are some of the most popular dividend stocks among investors as these stocks have been growing their dividends year after year. In addition to this, they have sufficient cash flows to keep increasing those dividend payments every year in the future.
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Our Methodology:
For this list, we chose ETFs that primarily invest in reliable dividend-paying stocks and offer stable yields to investors. The EFTs mentioned below have generated positive returns in 2023 so far. The major holdings of these ETFs are also mentioned to provide an in-depth analysis of these funds. The list is ranked in ascending order of ETFs’ year-to-date returns, as of September 11.
10. WisdomTree U.S. SmallCap Dividend Fund (NYSE:DES)
Year-to-Date Returns as of September 11: 1.16%
WisdomTree U.S. SmallCap Dividend Fund (NYSE:DES) is an exchange-traded fund that focuses on providing exposure to dividend-paying small-cap stocks in the U.S. As of August 9, the fund has over $1.8 billion available in total assets and its expense ratio came in at 0.38%. Since the start of 2023, the fund has delivered a 1.16% return to shareholders, as of September 11.
EPR Properties (NYSE:EPR) is one of the largest holdings of WisdomTree U.S. SmallCap Dividend Fund (NYSE:DES), representing 0.98% of the fund’s portfolio. The company currently pays a monthly dividend of $0.275 per share and has a dividend yield of 7.46%, as recorded on September 11.
At the end of Q2 2023, 19 hedge funds tracked by Insider Monkey reported having stakes in EPR Properties (NYSE:EPR), the same as in the previous quarter. The overall value of these stakes is over $208 million. With over 1.2 million shares, Waterfront Capital Partners was the company’s leading stakeholder in Q2.
9. Fidelity International High Dividend ETF (NYSE:FIDI)
Year-to-Date Returns as of September 11: 1.63%
Fidelity International High Dividend ETF (NYSE:FIDI) is a dividend-focused exchange-traded fund that focuses on investing in foreign stocks with high dividend payouts. It follows an index made up of large and mid-sized companies in developed markets outside of the US. The fund was launched in 2018 and aims to provide investors with income from dividends.
Fidelity International High Dividend ETF (NYSE:FIDI) has over $82.07 million in assets under management and has a net expense ratio of 0.39%. As of September 11, the fund has a dividend yield of 4.99%. The fund returned 1.63% since the start of 2023.
Algonquin Power & Utilities Corp. (NYSE:AQN) is a prominent holding of Fidelity International High Dividend ETF (NYSE:FIDI), making up 2.55% of the fund’s portfolio. The company operates in the energy and utility sector and also specializes in the generation of electricity through various means, including renewable energy sources. The company currently pays a quarterly dividend of $0.185 per share and has a dividend yield of 6.02%, as of September 11.
The number of hedge funds tracked by Insider Monkey owning stakes in Algonquin Power & Utilities Corp. (NYSE:AQN) grew to 29 in Q2 2023, from 27 in the previous quarter. The overall value of these stakes is over $524.6 million.
8. Vanguard International High Dividend Yield Fund (NASDAQ:VYMI)
Year-to-Date Returns as of September 11: 4.73%
Vanguard International High Dividend Yield Fund (NASDAQ:VYMI) seeks to provide investors with exposure to international stocks that have a high dividend yield. The primary goal of the fund is to offer income through dividend payments while also potentially benefiting from capital appreciation. The fund is managed by Vanguard Group, one of the largest and most well-known investment management companies in the world. It is among the best dividend ETFs on our list.
Vanguard International High Dividend Yield Fund (NASDAQ:VYMI) has over $6.35 billion available in assets under management with a net expense ratio of 0.22%. Since the start of 2023, the fund has delivered a 4.73% return to shareholders, as of September 11.
Unilever PLC (NYSE:UL) is one of the most important holdings of Vanguard International High Dividend Yield Fund (NASDAQ:VYMI). It is a multinational consumer goods company that operates in various segments of the consumer products industry. The company pays a quarterly dividend of $0.457 per share for a dividend yield of 3.71%, as recorded on September 11.
As of the close of Q2 2023, 19 hedge funds in Insider Monkey’s database owned investments in Unilever PLC (NYSE:UL), up from 18 in the previous quarter. The consolidated value of these stakes is over $318.4 million.
Artisan Partners mentioned Unilever PLC (NYSE:UL) in its Q2 2023 investor letter. Here is what the firm has to say:
“We made two significant purchases during the quarter: Unilever PLC (NYSE:UL) and Bayer AG. Both companies have been owned in prior years. And the share price of both companies became more attractive at least partially due to the stock market’s recent focus on technology stocks.
Unilever PLC is a manufacturer of consumer goods with a market cap of 100 billion pounds. You will be familiar with some of their products, such as Ben and Jerry’s ice cream, Dove Soap and Hellman’s mayonnaise. The company is a global powerhouse with 60 billion euros in revenue and 14 brands with sales over 1 billion euros. Dove, Knorr and OMO (Old Mother Owl, which is a global detergent brand) generate more than 4 billion euros in sales each. The company is diversified across five global divisions, including beauty and wellbeing, personal care, homecare and nutrition. Each of these businesses generates between 12 billion and 14 billion euros in revenue. Ice cream is the fifth division with close to 5 billion euros in revenue.”
7. Vanguard Total Intl Stock Idx Fund (NASDAQ:VXUS)
Year-to-Date Returns as of September 11: 5.47%
Vanguard Total Intl Stock Idx Fund (NASDAQ:VXUS) tracks the performance of the FTSE Global All Cap ex-US Index, which measures how well stocks from companies outside the United States are doing as an investment. This fund also offers a wide-ranging investment in international stock markets, covering both developed and emerging markets outside the United States. It is one of the best dividend ETFs on our list with a year-to-date return of 5.47%, as of September 11.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the largest holding of Vanguard Total Intl Stock Idx Fund (NASDAQ:VXUS) as of July 31. The company represented 1.31% of the fund’s portfolio. TSMC is one of the world’s leading semiconductor manufacturing companies that also plays a crucial role in the global semiconductor industry.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was a popular stock among hedge funds at the end of Q2 2023, as the number of funds in Insider Monkey’s database owning stakes in the company jumped to 121, from 102 in the previous quarter. The collective value of these stakes is over $9.6 billion. With over 9 million shares, First Eagle Investment Management was the company’s leading stakeholder in Q2.
6. FCF International Quality ETF (BATS:TTAI)
Year-to-Date Returns as of September 11: 5.80%
FCF International Quality ETF (BATS:TTAI) is a managed fund that combines quantitative modeling and in-depth analysis to invest in foreign stocks with strong free cash flows. It aims to achieve solid, long-term returns that outperform the MSCI All Country World Index ex USA while keeping risk under control. The fund has returned 5.80% to shareholders since the start of 2023, which makes it one of the best dividend ETFs on our list.
Accenture plc (NYSE:ACN) is one of the most prominent holdings of FCF International Quality ETF (BATS:TTAI), making up 2.25% of the fund’s portfolio. The global professional services company provides a wide range of services to organizations around the world. It currently pays a quarterly dividend of $1.12 per share and has a dividend yield of 1.37%, as recorded on September 11.
At the end of June 2023, 56 hedge funds tracked by Insider Monkey owned stakes in Accenture plc (NYSE:ACN), compared with 60 in the previous quarter. The collective value of these stakes is over $2.12 billion. Among these hedge funds, GuardCap Asset Management was the company’s leading stakeholder in Q2.
5. Invesco FTSE RAFI US 1000 ETF (NYSE:PRF)
Year-to-Date Returns as of September 11: 6.33%
Invesco FTSE RAFI US 1000 ETF (NYSE:PRF) is next on our list of the best dividend ETFs with a year-to-date return of 6.33%, as of September 11. The exchange-traded fund seeks the performance of the FTSE RAFI US 1000 Index, which is designed to provide exposure to U.S. large-cap stocks based on fundamental factors rather than market capitalization. The ETF strives to achieve returns that align with this index.
Apple Inc. (NASDAQ:AAPL) is one of the largest holdings of Invesco FTSE RAFI US 1000 ETF (NYSE:PRF), accounting for 2.57% of the fund’s portfolio. The tech giant has been raising its dividends consistently for the past 11 years and currently pays a quarterly dividend of $0.24 per share and has a dividend yield of 0.54%, as of September 11.
As of the end of Q2 2023, 135 hedge funds tracked by Insider Monkey reported having stakes in Apple Inc. (NASDAQ:AAPL), up from 131 in the previous quarter. The collective value of these stakes is over $194 billion.
4. Vanguard Dividend Appreciation Index Fund (NYSE:VIG)
Year-to-Date Returns as of September 11: 6.34%
Vanguard Dividend Appreciation Index Fund (NYSE:VIG) tracks the performance of companies that have strong histories of raising their dividends. The fund provides diversification benefits by holding a basket of dividend-growth stocks from various sectors and industries within the U.S. equity market.
Microsoft Corporation (NASDAQ:MSFT), UnitedHealth Group Incorporated (NYSE:UNH), and JPMorgan Chase & Co. (NYSE:JPM) are some of the most prominent holdings of Vanguard Dividend Appreciation Index Fund (NYSE:VIG). These companies have histories of consistently raising their dividends over time.
3. ProShares MSCI Europe Dividend Growers ETF (BATS:EUDV)
Year-to-Date Returns as of September 11: 6.55%
ProShares MSCI Europe Dividend Growers ETF (BATS:EUDV) seeks to provide investors with exposure to European companies that have a history of consistently increasing their dividend payments over time. Since the start of 2023, the fund delivered a 6.55% return to shareholders, which makes it one of the best dividend ETFs on our list.
As of July 31, ProShares MSCI Europe Dividend Growers ETF (BATS:EUDV) has invested in 38 companies and its net expense ratio came in at 0.55%. One of the fund’s most prominent holdings is Diageo plc (NYSE:DEO), which is a British multinational beverage alcohol company. It currently pays a semi-annual dividend of $2.5088 per share and has a dividend yield of 2.52%, as recorded on September 11.
The number of hedge funds tracked by Insider Monkey owning stakes in Diageo plc (NYSE:DEO) stood at 25 in Q2 2023, growing from 23 in the previous quarter. The collective value of these stakes is over $428.6 million. Warren Buffett’s Berkshire Hathaway was one of the company’s leading stakeholders in Q2.
2. Strive 1000 Dividend Growth ETF (NASDAQ:STXD)
Year-to-Date Returns as of September 11: 7.79%
Strive 1000 Dividend Growth ETF (NASDAQ:STXD) is a passively managed exchange-traded fund that mainly invests in companies with consistent years of dividend growth. The fund was launched last year in October and has over $26 million in assets under management.
The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and Eli Lilly and Company (NYSE:LLY) are some of the most prominent holdings of the fund. Since the start of 2023, the fund has delivered a 7.79% to shareholders, which places it as one of the best dividend ETFs on our list.
1. Fidelity High Dividend ETF (NYSE:FDVV)
Year-to-Date Returns as of September 11: 8.08%
Fidelity High Dividend ETF (NYSE:FDVV) seeks to provide investment results that correspond to the performance of the Fidelity High Dividend Index. This index is designed to reflect the performance of U.S. large- and mid-capitalization high-dividend-paying stocks. The fund tops our list of the best dividend ETFs with, returning 8.08% year-to-date, as of September 11.
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Disclosure. None. 10 Best Dividend ETFs is originally published on Insider Monkey.
