In this article, we will be taking a look at 10 dividend ETFs to buy.

With a market as diverse as the one we know, it is unlikely that investors would suffer from a shortage of investment vehicles. Stocks, index funds, bonds, and many other options exist for the new investor to multiple their wealth. Exchange-traded funds, or ETFs, are just one other such investment vehicle. These funds are typically preferred by new investors looking for market exposure, and hold securities, like bonds and stocks. So investing in ETFs is typically good for those seeking diversification in their portfolios, and doing so spreads out investors’ money across a plethora of investments. As such, investing in ETFs can often be quite rewarding and reliable, much like investing in dividend stocks like Exxon Mobil Corporation (NYSE:XOM), AbbVie, Inc. (NYSE:ABBV), Microsoft Corporation (NASDAQ:MSFT), and Target Corporation (NYSE:TGT).

What is an ETF?

Before jumping into anything new, it helps to do your research on it and become familiar with the way things work. Like we mentioned above, ETFs are investment vehicles that hold securities, like stocks and bonds. Additionally, these vehicles track market index performances of indexes like the S&P 500, and others. Because of this mimicking of an index’s performance, ETFs typically have lower fees than mutual funds and are investments that can and are managed more passively than others.

Given the above context, let’s look at why you should consider investing in ETFs. According to Bloomberg as of this July, ETFs this year have been witnessing a drastic increase in investor attention they have received. Bloomberg states that these investments, in the first seven months of 2021, were about to pull in more money than ever recorded before in history. In July, this figure stood at $488.5 billion, and at the time it was expected that the $497 billion full-year record of 2020 would be broken in only a matter of weeks, if not days.

Based on historical precedent, the pandemic can be expected to have been the harbinger of this ETF craze, at least as far as investor circles are concerned. Looking at the 2008 financial crisis, we saw that in the aftermath of the market crash there was a worrisome mistrust coming to the forefront where money managers were concerned. As such, investors at the time began eyeing the passive and significantly more transparent ETFs, a move that doubled US funds’ assets to about $1 trillion as early as 2010. Come the coronavirus pandemic, it has been suggested that the market downfall triggered by the pandemic has precipitated the new rush towards ETFs in an atmosphere that was worryingly similar to the one in 2008. By July 2021, US funds assets jumped from $3.7 trillion, the record high at last year’s selloff, to $6.6 trillion, only in the first seven months of 2021. In comparison to mutual funds as well, the popularity of ETFs was starkly distinct: in 2020, ETFs were the instruments adding $497 billion in new cash, while mutual funds witnessed net withdrawals of $506 billion, after all.

Apart from investor sentiment on ETFs earlier this year, looking at ETF performance more recently sheds more light on why one should invest in them. According to an article on ETF.com, U.S.-listed ETFs reportedly gained $22.6 billion in inflows just this November, between the 5th and 11th. Fixed income inflows more than doubled week-over-week as well, marking a $761.7 million gain in the US ETF industry in year-to-date inflows. The industry was reported to have almost $7.1 trillion in assets under management as of this November as well, according to ETF.com’s data provider FactSet.

Photo by Adam Nowakowski on Unsplash

Without further ado, let’s take a look at the 10 dividend ETFs to buy.

Our Methodology

We have selected dividend ETFs with yields of over 1.5% for our list below. For each ETF, we have mentioned its total return and price return relative to the S&P 500 as well. Each stock is ranked on the basis of dividend yield, from lowest to highest.

Dividend ETFs to Buy

10. Vanguard Dividend Appreciation Index Fund ETF Shares (NYSE:VIG)

Dividend Yield: 1.5%

Vanguard Dividend Appreciation Index Fund ETF Shares (NYSE:VIG) is among the best dividend ETFs to buy, investing in US public equity markets. The ETF tracks the performance of the S&P US Dividend Growers Index using the full replication technique.

In the past year, the price return for Vanguard Dividend Appreciation Index Fund ETF Shares (NYSE:VIG) has been 23.22%. Vanguard Dividend Appreciation Index Fund ETF Shares (NYSE:VIG) has also gained 8.29% in the past six months and 20.32% year to date.

Like Exxon Mobil Corporation (NYSE:XOM), AbbVie, Inc. (NYSE:ABBV), Microsoft Corporation (NASDAQ:MSFT), and Target Corporation (NYSE:TGT), Vanguard Dividend Appreciation Index Fund ETF Shares (NYSE:VIG) is a dividend option investors are eyeing today.

9. First Trust Value Line Dividend Index Fund (NYSE:FVD)

Dividend Yield: 1.7%

First Trust Value Line Dividend Index Fund (NYSE:FVD) is an ETF tracking the performance of the Value Line Dividend Index, using the full replication technique. The stock is one of the better-performing dividend ETFs to buy today, and invests in value stocks across diversified market capitalization.

The price return for First Trust Value Line Dividend Index Fund (NYSE:FVD) in the past year has been 22.64%. Compared to this, the price return for the S&P 500 over the same time has been 32.40%. The total return for the stock has been 25.06%, compared to the 10.40% total return for the S&P 500. Finally, First Trust Value Line Dividend Index Fund (NYSE:FVD) has also gained 4.02% in the past six months and 21.11% year to date.

8. ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL)

Dividend Yield: 1.8%

ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL) invests in large-cap growth and value stocks and is among the better options for dividend ETFs to buy. The stock tracks the performance of the S&P 500 Dividend Aristocrats Index by making use of the full replication technique.

In comparison to the S&P 500’s 32.40% price return over the past year, the price return for ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL) has been 24.81% over the same period. The total return for the S&P 500 was 10.40%, while the same for ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL) was 27.41%. The stock has also gained 4.39% in the past six months and 22.67% year to date.

7. iShares Core Dividend Growth ETF (NYSE:DGRO)

Dividend Yield: 1.9%

iShares Core Dividend Growth ETF (NYSE:DGRO) is an ETF managed by BlackRock Fund Advisors. The ETF invests in US-based public equity markets and stocks of companies in diversified sectors. It is among the best dividend ETFs to buy, and seeks to track the performance of the Morningstar US Dividend Growth Index, using the representative sampling technique.

iShares Core Dividend Growth ETF’s (NYSE:DGRO) price return over the past year was 27.47%, compared to a 32.40% price return for the S&P 500 over the same period. In addition, the total return for the stock in the past year was 30.27%, compared to the S&P 500’s 10.40% total return. iShares Core Dividend Growth ETF (NYSE:DGRO) has gained 6.70% in the past six months and 22.56% year to date.

6. Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM)

Dividend Yield: 2.7%

Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM), an ETF launched and managed by the Vanguard Group, Inc., is one of the most noteworthy dividend ETFs to buy today. The fund invests in growth and value stocks across diversified market capitalization. It seeks to track the performance of the FTSE High Dividend Yield Index, using the full replication technique.

For the past year, the price return for Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM) was 27.99%. The price return for the S&P 500, in comparison, was 32.40%. The total return for the fund was 31.88%, while the same for the S&P 500 was 10.40%. Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM) has also gained about 3.03% in the past six months and 22.50% year to date.

Like Exxon Mobil Corporation (NYSE:XOM), AbbVie, Inc. (NYSE:ABBV), Microsoft Corporation (NASDAQ:MSFT), and Target Corporation (NYSE:TGT), Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM) is a noteworthy dividend investment option.

5. SPDR S&P Dividend ETF (NYSE:SDY)

Dividend Yield: 2.7%

SPDR S&P Dividend ETF (NYSE:SDY), launched by State Street Global Advisors, Inc., is an ETF investing in American equity markets, growth and value stocks, and dividend stocks. The ETF, being one of the best dividend ETFs to buy, tracks the performance of the S&P High Yield Dividend Aristocrats Index and the S&P 500 Index, using the representative sampling technique.

In the past year, the price return for SPDR S&P Dividend ETF (NYSE:SDY) was 21.44%, compared to 31.86% for the S&P 500. The total return for the stock was 25.06%, compared to 10.4% for the S&P 500. SPDR S&P Dividend ETF (NYSE:SDY) has also gained 1.37% in the past six months and 20.42% year to date.

4. Schwab U.S. Dividend Equity ETF (NYSE:SCHD)

Dividend Yield: 2.8%

Schwab U.S. Dividend Equity ETF (NYSE:SCHD) is a fund that seeks to track the performance of the Dow Jones U.S. Dividend 100 Index, using the full replication technique. It is among the best dividend ETFs to buy. The fund invests in stocks of companies in the energy, materials, industrials, consumer discretionary, consumer staples, healthcare, financials, information technology, communication services, and utilities sectors.

The price return for Schwab U.S. Dividend Equity ETF (NYSE:SCHD) in the past year was reportedly 26.67%, compared to the S&P 500’s 31.86% figure. Additionally, the total return for the fund was 30.71%, compared to 10.40% for the S&P 500. Schwab U.S. Dividend Equity ETF (NYSE:SCHD) has gained 3.16% in the past six months and 24.40% year to date as well.

3. iShares Core High Dividend ETF (NYSE:HDV)

Dividend Yield: 3.4%

iShares Core High Dividend ETF (NYSE:HDV), an ETF launched and managed by BlackRock, invests in growth and value and dividend paying stocks. The fund is one of the most noteworthy dividend ETFs to buy currently, and seeks to track the performance of the Morningstar Dividend Yield Focus Index. It uses the representative sampling technique to this end.

iShares Core High Dividend ETF’s (NYSE:HDV) price return was 14.57% in the past year, compared to 31.86% for the S&P 500. The fund’s total return was 18.75%, compared to 10.40% for the S&P 500. iShares Core High Dividend ETF (NYSE:HDV) has also gained 0.43% in the past six months and 12.84% year to date.

2. iShares International Select Dividend ETF (BATS:IDV)

Dividend Yield: 5.5%

iShares International Select Dividend ETF (BATS:IDV), another ETF launched and managed by BlackRock, invests in public equity markets of global-ex US region. Being among the top dividend ETFs to buy today, it seeks to track the performance of the Dow Jones EPAC Select Dividend Index, and uses the representative sampling technique as well.

The fund’s price return for the past year was 10.18% compared to the S&P 500’s 31.86% figure. The total return was 16.33%, relative to 10.40% for the S&P 500’s total return. iShares International Select Dividend ETF (BATS:IDV) has also gained 3.25% year to date and 9.76% in the past year.

1. Invesco KBW High Dividend Yield Financial ETF (NASDAQ:KBWD)

Dividend Yield: 6.7%

Invesco KBW High Dividend Yield Financial ETF (NASDAQ:KBWD), launched and managed by Invesco Capital Management LLC, is among the best dividend ETFs to buy today. The fund tracks the performance of the KBW Nasdaq Financial Sector Dividend Yield Index, and uses the full replication technique.

The price return for the fund in the past year was 35.03%, compared to 31.86% for the S&P 500. The total return for the fund was 45.54% compared to 10.40% for the S&P 500. Invesco KBW High Dividend Yield Financial ETF (NASDAQ:KBWD) has gained 1.84% in the past six months and 29.13% year to date.

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Disclosure: None. 10 Dividend ETFs to Buy is originally published on Insider Monkey.