3 High-Yield Dividend ETFs to Load Up On Right Now (And Why)

Some investors consistently seek the highest-growth stocks in the market. Others focus almost exclusively on quality, with valuation being the most vital metric to consider. Still others will focus on dividend yield, and the absolute size of a stock’s dividend yield, as the key metric to consider when evaluating the investability of a given stock. 

Personally, I believe a combination of the three can be most meaningful for those seeking substantial total returns over the long term. That said, I can also recognize that there will be plenty of investors who want to know that they’re receiving the best up-front yield possible, and that said yield will be there over time (and hopefully grow as well). 

Here are three of the highest-yielding ETFs I think can provide the kind of dividend upside investors are looking for, within specific value and growth guardrails. 

Invesco S&P SmallCap High Dividend Low Volatility ETF (XSHD)

With a dividend yield of approximately 6.8%, the Invesco S&P SmallCap High Dividend Low Volatility ETF (XSHD) is one of the top options in the market for investors seeking to maximize their yield. Tracking the 90 highest-yielding U.S. small-cap stocks, this ETF employs a unique allocation strategy. It selects the 60 stocks from this group with the lowest price volatility and then weights each position based on its respective yield. 

With such a concentrated portfolio, risks tied to market swings are amplified. And over the long term, investors in the total yield this ETF provides may also experience fluctuations. 

This ETF’s expense ratio of 0.3% is reasonable, considering the amount of work that will undoubtedly be required to rebalance this portfolio from time to time. Indeed, for investors seeking to capitalize on a rally in small-cap stocks (which have underperformed their large-cap counterparts on a relative basis) while mitigating downside risk through a volatility screen, this is how I’d approach gaining exposure to the small-cap space right now. 

Vanguard International High Dividend Yield Index ETF (VYMI) 

For investors who may be overly exposed to the U.S. market through index funds or other investment vehicles, having some international exposure can be highly beneficial over the long term. In this regard, the Vanguard International High Dividend Yield Index ETF (VYMI) can be an excellent option for those with a long-term investing time horizon. 

Tracking the All-World ex-U.S. High Dividend Yield Index, the VYMI ETF provides investors with exposure to around 1,500 stocks around the world in both emerging and developing markets across most sectors. Notably, REITs are excluded from this ETF, so those bearish on the direction of the housing and real estate market can gain some portfolio protection with this ETF. 

Importantly, VYMI offers investors a generous 4% dividend yield at a cost of just 0.17% per year. That’s a reasonable tradeoff for extensive global exposure to a range of blue chip and defensive dividend stocks that U.S. investors aren’t typically exposed to.

From a diversification, yield, and cost standpoint, this ETF is among the best in my view. 

Schwab U.S. Dividend Equity ETF (SCHD)

As a personal portfolio holding, I appreciate the long-term upside potential and current dividend yield offered by the Schwab U.S. Dividend Equity ETF (SCHD). 

This ETF is primarily designed for investors seeking U.S. dividend exposure. Tracking the Dow Jones U.S. Dividend 100 Index, only the most extensive and safest dividend stocks are included in this ETF. So, investors who prefer lower-beta exposure to the markets and dividend yields supported by solid fundamental metrics, such as cash flow to debt ratios, can sleep well at night holding an ETF like SCHD. 

This ETF’s bias toward value and profitability is particularly notable to me. Most investors are well aware that some of the highest-quality stocks in the world are based in the U.S., and that’s a reality I don’t think will change anytime soon.

With a dividend yield of 3.8% and a rock-bottom expense ratio of just 0.06%, there’s a lot to like about this ETF’s long-term upside in addition to its impressive yield.