Dividend investing is an important part of a long-term strategy for income investors.
The SPDR Portfolio S&P 500 High Dividend ETF offers investors exposure to sectors ranging from real estate to financials.
The Schwab US Dividend Equity ETF invests in a variety of tried-and-true blue-chip stocks.
10 stocks we like better than SPDR Portfolio S&P 500 High Dividend ETF ›
Investing in exchange-traded funds (ETFs) with high dividend yields can provide investors with a steady income stream and potentially lower portfolio volatility, which is especially attractive to long-term investors or those approaching retirement. However, it is crucial to balance your desire for high yield with a focus on quality underlying fundamentals to avoid value traps.
Quality, high-yield ETFs can provide regular passive income, which can prove invaluable to investors looking to grow their wealth by reinvesting dividends. Additionally, the dividend-paying companies contained in these ETFs tend to be mature and financially stable.
If you’re looking for high-dividend ETFs to invest in right now, here are two names to consider for your portfolio.
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He SPDR Portfolio S&P 500 High Dividend ETF(NYSEMKT: SPYD) tracks the performance of the top 80 high dividend yielding companies within the S&P 500. This passively managed fund trades at about $43 per share, offers a higher dividend yield than the broader S&P 500 index (about 1.2%), and has significant sector concentration in areas including real estate, utilities, and financials. The ETF’s trailing 12-month dividend yield is approximately 4.5%. It has a very low expense ratio of 0.07%, meaning that a $10,000 investment in this ETF would cost only $7 a year in fees.
The fund’s index selects the 80 highest-performing stocks in the S&P 500 and weights them equally. The index is rebalanced semiannually and the fund currently manages more than $7.3 billion in net assets. The SPDR Portfolio S&P 500 High Dividend ETF’s primary sector exposure by weight includes: real estate (21.4%), utilities (13.4%), financials (17.3%), and consumer staples (16.3%).
Through the end of 2025, the ETF has a minimum exposure of less than 2% to the technology sector, an industry that has driven broad market gains in recent decades. Historically speaking, the ETF’s capital appreciation has remained much lower than that of the broader market: it has generated a total return of around 130% since its inception in 2015, compared to the S&P 500’s total return of more than 300% in the same period. The fund’s top holdings include CVS Health, viatris, Invesco, merck, Ford, abbvieand US Bancorp.
One caveat to keep in mind: Dividends from the SPDR Portfolio S&P 500 High Dividend ETF are taxed as ordinary income rather than capital gains because the fund has significant investments in various real estate investment trusts (REITs), which are pass-through entities whose distributions have a different tax structure.
If you’re an investor with a more conservative risk tolerance looking to invest in the highest-performing companies within the S&P 500 vetted universe, the SPDR Portfolio S&P 500 High Dividend ETF could be an obvious, low-cost choice for putting cash into a basket of great businesses that can help boost your portfolio’s returns for years to come.
Schwab US Dividend Stock ETF(NYSEMKT: SCHD) It currently trades at around $28 per share, with a yield of approximately 3.8%. The ETF aims to mirror the performance of the Dow Jones US Dividend 100 Index and screens for companies with strong balance sheets, high profitability, and a history of consistent dividend payments.
The fund naturally leans toward sectors such as energy (19.34%), consumer staples (18.5%), and healthcare (16%), an approach that can provide stability for investors through various economic cycles. The ETF holds about 100 stocks, including big names like Bristol-Myers Squibb, cisco, ConocoPhillips, PepsiCo, Lockheed Martin, Coca-colaand Verizon. It has just under $73 billion in assets under management.
Companies with market capitalizations of $70 billion or more make up more than 58% of the Schwab US Dividend Equity ETF portfolio, so investors benefit from dividend income from some of the world’s most established companies. The fund’s expense ratio is quite low: 0.06%.
Over the last decade, the ETF has achieved a total return of over 200%. While that lags the performance of the S&P 500, it still generates an annualized return of about 11% to 12%, depending on the year. If you want to buy a basket of blue-chip dividend-paying companies, this ETF could be just what you’re looking for.
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Rachel Warren has positions at AbbVie. The Motley Fool lists and recommends AbbVie, Bristol Myers Squibb, Cisco Systems, Merck, and US Bancorp. The Motley Fool recommends CVS Health, ConocoPhillips, Lockheed Martin and Verizon Communications. The Motley Fool has a disclosure policy.
Top 2 High-Yield Dividend ETFs to Buy in 2026 was originally published by The Motley Fool
