Top 5 Dividend ETFs for Income & Growth: SCHD, VIG, DGRO, VYM, SDY

The Schwab US Dividend Equity ETF (SCHD) stands out as a premier choice for income-focused investors, boasting an impressive 3.93% yield with an exceptionally low expense ratio of 0.06%. Tracking the Dow Jones U.S. Dividend Index, this ETF provides exposure to 103 high-quality dividend stocks across multiple sectors. Its diversified holdings include industry leaders such as Amgen, AbbVie, Home Depot, Cisco Systems, Broadcom, Chevron, UPS, and Coca-Cola, offering investors broad market exposure while maintaining a focus on dividend reliability.

The ETF’s recent performance demonstrates both income stability and growth potential. SCHD paid dividends of just over 26 cents on June 30 and approximately 24 cents on March 31, providing consistent quarterly income. Since bottoming at around $23.75 in April, the ETF has rallied significantly to $27.50, representing substantial capital appreciation alongside its dividend payments. Technical analysis suggests the next resistance level lies at $28.75, indicating potential for further upside from current levels.

For investors prioritizing consistent dividend growth over raw yield, the Vanguard Dividend Appreciation Index Fund ETF (VIG) and iShares Core Dividend Growth ETF (DGRO) offer compelling alternatives. VIG tracks the S&P U.S. Dividend Growers Index with an ultra-low 0.05% expense ratio and a 1.59% yield. Its portfolio of 337 holdings includes dividend growth stalwarts such as Broadcom, Microsoft, JPMorgan Chase, Apple, and Eli Lilly, with significant sector concentration in information technology (26%), financials (22.6%), and healthcare (15%).

The DGRO ETF provides similar dividend growth exposure with a 0.08% expense ratio and approximately 2.2% yield. Its top holdings mirror quality dividend growers like Apple, Microsoft, Johnson & Johnson, Exxon Mobil, Broadcom, and AbbVie, with sector allocations favoring financials (20%), information technology (18%), and healthcare (17.5%). Both ETFs have demonstrated strong recovery patterns since April, with VIG climbing from $170 to $217.27 and DGRO advancing from $54 to $68.47, with respective price targets of $230 and $75 suggesting continued upside potential.

Recent dividend payments underscore their income-generating capabilities. VIG distributed just over 86 cents on October 1 and approximately 87 cents on July 2, while DGRO paid just over 36 cents on September 19 and about 32 cents on June 20. These consistent payments, combined with capital appreciation, create a powerful total return proposition for long-term investors.

The Vanguard High Dividend Yield ETF (VYM) targets companies with above-average dividend yields, tracking the FTSE High Dividend Yield Index with a 0.06% expense ratio and 2.45% yield. Its extensive portfolio of 579 holdings includes Broadcom, JPMorgan Chase, Exxon Mobil, Johnson & Johnson, and Walmart, providing diversified exposure across sectors with particular emphasis on financials (21.7%) and industrials (13.2%). The ETF’s recent dividend payments of just over 84 cents on September 23 and approximately 86 cents on June 24 demonstrate its income consistency.

The SPDR S&P Dividend ETF (SDY) takes a more specialized approach by focusing exclusively on Dividend Aristocrats—companies that have increased dividends for at least 20 consecutive years. With a 0.35% expense ratio and 2.54% yield, SDY tracks the S&P High Yield Dividend Aristocrats Index through 149 holdings including Verizon, Realty Income, Chevron, AbbVie, Target, and Exxon Mobil. Its sector allocation emphasizes industrials (19.3%), consumer staples (16.55%), and utilities (15.86%), providing defensive characteristics alongside income generation.

Both VYM and SDY have shown remarkable recovery since April, with VYM advancing from $112 to $140.88 and SDY rallying from $110 to $140.19. Their respective price targets of $150 suggest significant additional upside potential. SDY’s recent dividend payments of 87 cents on September 24 and 93 cents on June 25 further validate its income-focused strategy and commitment to dividend consistency.

These five ETFs represent distinct approaches to dividend investing, allowing investors to tailor their exposure based on specific income and growth objectives. SCHD and VYM focus on higher current yields, while VIG and DGRO prioritize dividend growth consistency. SDY offers the unique proposition of investing exclusively in companies with proven long-term dividend increase track records. The low expense ratios across these funds—ranging from 0.05% to 0.35%—enhance their appeal by minimizing the drag of management fees on total returns.

The collective performance of these ETFs since their April lows demonstrates the resilience of dividend-paying stocks during market recoveries. Their combination of capital appreciation and regular income distributions provides a compelling case for inclusion in diversified investment portfolios, particularly for investors seeking to balance growth objectives with income generation. The clear price targets outlined for each ETF suggest that analysts see continued momentum in the dividend stock space, making these funds attractive for both near-term trading opportunities and long-term strategic allocation.