3 Magnificent Dividend ETFs Every Investor Should Own for Their Retirement Accounts

By Chris MacDonald Published Jul 8, 8:45AM EDT

Key Points

Dividend investing can be boring, and probably should be, for those with a long-term investing time horizon.
These three ETFs simplify the investing process for those looking to invest and forget, with plenty of blue-chip holdings providing capital appreciation upside over time as well.

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For investors looking for meaningful and sustained dividend income today or in retirement, there are plenty of options to choose from. Whether it’s individual stocks, alternative assets, fixed income securities, or investing in a broader basket of such securities in an exchange traded fund (ETF) or similar offerings, there are thousands of such options to choose from.

In the ETF world, there happen to be a plethora of options for investors to choose from as well. Here are three of the largest dividend ETFs I think provide investors with the right mix of diversification and dividend yield for those with a long-term investing time horizon.

Companies that pay dividends tend to be more stable and have greater longevity (and obvious income potential) than those in higher-growth areas of the market. So, for those seeking portfolio balance or prioritizing yield over capital appreciation, these are three funds I’d consider right now.

WisdomTree U.S. Quality Dividend Growth Fund (DGRW)

The WisdomTree U.S. Quality Dividend Growth Fund (DGRW) is among the top quality-focused dividend ETFs in the market I continue to think is worth considering. For those with a long-term investing time horizon, capital preservation is important. Thus, it’s not necessarily as much about the yield for some investors as it is about the durability of the underlying holdings within an ETF.

In the case of DGRW, there’s a lot to like about the methodology that the fund puts in place to select its holdings. Using a range of value-based metrics, investors can rest assured that their holdings are not only going to deliver yield (currently a dividend yield of around 1.6%, still better than the overall S&P 500), but that there will be some likely capital appreciation upside and defensiveness to one’s holdings that’s hard to come by in this space.

Now, investors do need to pay up for the diversification and quality-based selection process this ETF employs. With a current expense ratio of around 0.28%, this ETF’s cost is on the higher end of what I’d consider to be an investable option. But for those prioritizing balance sheet quality and safety over returns right now, it’s a solid partner to dance with.

SPDR S&P 500 High Dividend ETF (SPYD)

For investors looking to amplify their overall portfolio yield, the SPDR S&P 500 High Dividend ETF (SPYD) is a top ETF to consider. This particular fund focuses its attention on the 80 highest-yielding stocks in the S&P 500. Thus, there’s some implicit quality baked into this fund, given that the S&P 500 itself is comprised of the 500 largest (and seemingly safest) stocks in the market.

With a dividend yield that’s historically hovered between the 4% and 5% levels (currently right smack dab in the middle at 4.5%), that’s the kind of return most investors can get behind. When considering that some Treasury bonds provide similar yields, the capital appreciation upside of this ETF’s core holdings provide the added boost many can get behind.

While this particular ETF may be more volatile than the average ETF due to its underlying core holdings (and a relative lack of tech exposure), there’s plenty to like about SPYD’s expense ratio. At just 7 basis points (0.07%), this is an ETF I think any long-term investor can own and sleep well at night doing so.

Vanguard International Dividend Appreciation ETF (VIGI)

Those who want greater diversification outside the U.S. market may want to take a look at the Vanguard International Dividend Appreciation ETF (VIGI). This ETF allows investors to gain the kind of international diversification they may want outside of the U.S. Thus, in combination with an ETF like SPYD (or even a more quality-focused option like DGRW), this ETF can round out one’s holdings well.

With a similarly-low yield of just 1.8% when compared to DGRW, there’s some truth to the fact that investors may be giving up some upside when holding such an ETF. But the reality is that many top global blue-chip stocks pay yields that are lower than what we see in the U.S. And given the recent outperformance of international stocks, this fund has started to garner more attention from investors seeking not only international exposure, but exposure to international companies that pay dividends.

With an expense ratio of 0.1%, this is an overlooked dividend ETF I think investors may want to look at, particularly in this shifting macro environment.

About the Author Chris MacDonald →

Chris MacDonald is a 24/7 Wall St. contributor and long-time contributor to other notable finance publications, including The Motley Fool and InvestorPlace. With an MBA in Finance, and more than a decade of experience in venture capital and the corporate finance world, Chris brings a long-term perspective to his analysis of equities and alternative assets.

His love of investing and focus on finding quality undervalued stocks is complemented by recent research into alternative assets as well. He takes a long-term approach to analyzing companies and cryptos, with a focus on directing the reader to the most sustainable and important catalysts for each respective potential investment.