Dividend exchange-traded funds (ETFs) are designed to invest in a basket of high-dividend-paying stocks. These stocks may be either domestic or international and may span a range of economic sectors and industries. However, high-dividend-paying stocks tend to be associated with companies that have a strong history of dividend increases and that usually means bigger, less-risky, blue-chip firms. Such companies include Intel Corp. (INTC), Procter & Gamble Co. (PG), and Nike Inc. (NKE). Dividend ETFs are favored by more risk-averse, income-seeking investors, but also are used by investors who want to balance riskier investments in their portfolio.
The dividend ETF universe is comprised of about 163 distinct ETFs, excluding inverse and leveraged ETFs. The best-performing dividend ETF in the past year is the Fidelity NASDAQ Composite Index Track (ONEQ) for Q1 2020. We examine the top 3 best dividend ETFs below. All numbers in this story are as of February 5, 2020.
- Performance over 1-Year: 30.7%
- Expense Ratio: 0.21%
- Annual Dividend Yield: 1.79%
- 3-Month Avg. Daily Trading Volume: 37,090
- Assets Under Management: $2,488.6 million
- Inception Date: September 25, 2003
- Issuing Company: Fidelity
ONEQ is a dividend ETF that invests in stocks of U.S. companies with a variety of market capitalizations and follows a blended strategy, investing in both growth and value stocks. As of February 5, 2020, the ETF's top three holdings include Apple Inc. (AAPL), Microsoft Corp. (MSFT), and Amazon.com Inc (AMZN), all three of which are considered multinational technology companies.
- Performance over 1-Year: 28.9%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 2.85%
- 3-Month Avg. Daily Trading Volume: 24,905
- Assets Under Management: $37.2 million
- Inception Date: May 27, 2015
- Issuing Company: Global X
YLCO is a dividend ETF focused on the global alternative energy sector, which is comprised of companies involved in the production and distribution of solar, wind, hydroelectric, or geothermal energy. The fund is considered a multi-cap ETF, investing in stocks of companies with a variety of different market caps, and follows a blended value/growth strategy. As of February 5, 2020, the ETF's top three holdings include EDP Energias de Portugal S.A. (EDP), a Portugal-based electric utilities company, Orsted A/S (ORSTED), a Denmark-based energy firm, and Engie Brasil Energia S.A. (EGIE3), a Brazil-based utility company.
- Performance over 1-Year: 27.6%
- Expense Ratio: 0.50%
- Annual Dividend Yield: 2.19%
- 3-Month Avg. Daily Trading Volume: 93,949
- Assets Under Management: $1,197.3 million
- Inception Date: August 14, 2012
- Issuing Company: First Trust
TDIV is a dividend ETF focused on stocks of large-cap U.S. technology companies. The fund follows a blended strategy, investing in both value and growth stocks. As of February 5, 2020, the ETF's top three holdings include Apple Inc., Microsoft Corp., and International Business Machines Corp. (IBM), a multinational information technology firm.