Top Dividend Funds

Steady income, less stress. See which dividend funds stand out.

Published: 11/25/2025, 9:45:27 AM EST

Top Dividend Funds — (Sutthiphong Chandaeng/Shutterstock)

Whether you’re just jumping into the world of investing or cruising your way into retirement, you can benefit from passive income.

One way to achieve this is by investing in dividend-paying stocks. Dividends are payments companies make to shareholders taken from their profits. These are usually paid quarterly or annually. So you can think of a dividend as a little bonus in addition to any positive price movements in the stock.

Dividends are measured by yield. Typically expressed as a percentage, this represents how much a company pays out in dividends each year relative to its share price.

But with a massive amount of dividend stocks out there, it can be difficult to choose the right ones. This is why some investors turn to dividend-paying mutual funds and exchange-traded funds (ETFs).

Dividend mutual funds and ETFs invest in hundreds and sometimes thousands of dividend-paying stocks screened by professionals.

But here, too, you have plenty to choose from. So we’ve narrowed down a list of some of the top dividend-paying ETFs and mutual funds out there. These are brought to you by investment giants like Vanguard, Charles Schwab, and Fidelity.

These aren’t necessarily ranked in order, and have been screened based on factors such as performance, yield, costs, and other factors gathered through independent research.

So let’s dig in.

Schwab US Dividend Equity ETF (SCHD)

Yield: 3.79 percent
10-year return: 12.23 percent
Expense ratio: 0.06 percent

The popular Schwab U.S. Dividend Equity ETF stands out for its performance, low costs, and yield. It aims to mimic the performance of the Dow Jones U.S. Dividend 100.

This ETF screens for stocks of quality companies that have a consistent track record of paying high-yield dividends. It places a large focus on defensive sectors like energy, consumer staples, and health care. Some of its top holdings include PepsiCo and Chevron.

It boasts an impressive 10-year annualized return of more than 12 percent. It also holds about $71.55 billion in net assets, and its 0.06 percent expense ratio is among the lowest in the industry.

Vanguard High Dividend Yield ETF (VYM)

Yield: 2.49 percent
10-year return: 11.86 percent
Expense ratio: 0.06 percent

This ETF shines with diversification. The Vanguard High Dividend Yield ETF aims to invest in companies that pay higher than average yields. It contains more than 500 stocks primarily in the financials, consumer staples, and basic materials sectors. Its holdings include Broadcom, JPMorgan Chase, and Exxon Mobil. It holds $81.29 billion in net assets and carries a low expense ratio of 0.06 percent.

Vanguard Dividend Growth Fund (VDGIX)

Yield: 1.56 percent
10-year return: 11.48 percent
Expense ratio: 0.22 percent

This actively managed mutual fund also stands out for performance. The Vanguard Dividend Growth Fund aims to invest in stocks of quality companies with the capacity to raise their yields over time. It tracks the Dividend Growth Spliced Index and invests in 45 stocks, primarily in financials, consumer discretionary, and information technology. Its main holdings include Microsoft, Broadcom, and Intuit. And even though it’s actively managed, it maintains a competitive expense ratio of 0.22 percent. Moreover, VDIGX holds $44.95 billion in net assets.

iShares Select Dividend ETF (DVY)

Yield: 3.41 percent
10-year return: 10.79 percent
Expense ratio: 0.38 percent

This ETF aims for consistency and has a notable track record. The iShares Select Dividend ETF invests in 100 high-dividend paying stocks with five-year records of paying dividends. Its holdings include Pfizer, Ford, and CVS. It maintains an impressive yield of 3.41 percent. Its net assets are $20.89 billion.

Fidelity Equity Dividend Income (FEQTX)

Yield: 2.21 percent
10-year return: 10.37 percent
Expense ratio: 0.54 percent

This fund aims to beat the dividend returns of stocks in the S&P 500 Index. It invests in large-cap companies primarily in the financial sector. Main holdings include Bancorp, Shell, and Travelers Companies. It has $7.52 billion in net assets.

Invesco KBW Premium Yield Equity REIT ETF (KBWY)

Yield: 9.50 percent
10-year return: 1.48 percent
Expense ratio: 0.35 percent

This ETF invests in equity real estate investment trusts with competitive dividend yields. It boasts a high yield of 9.5 percent. But keep in mind that funds with exceptionally high yields may be highly volatile.

KBWY’s beta is 1.27, suggesting it may be more volatile than the overall stock market. But if you can stomach its risks, you can benefit from a very high dividend yield.

The Bottom Line

These are some of the many top dividend-paying ETFs and mutual funds out there.

But the right dividend-paying fund ultimately depends on your investment goals. Are you seeking high yields or consistent growth? If you’re looking for the highest-yielding funds, then something like KBWY may suit you. But remember that higher yields tend to involve more risk. If you’re seeking moderate, yet consistent returns, then something like the SCHD may be right for you. And if you have a moderate-to-high-risk tolerance, you may turn to actively managed dividend funds like FEQTX, which aim to beat the markets.

But there’s more to it than that. Pay attention to the indexes these funds track and the companies they invest in. Are they more stable large-cap stocks or riskier small-cap stocks? Make sure these align with your goals and risk tolerance. Plus, you need to look into expense ratios as fees can eat away at your returns.

The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.

From The Epoch Times