If You Want Retirement Income VYM Won’t Cut it, But These 3 ETFs Could

By David Beren Published Dec 11, 10:18AM EST

Quick Read

The Vanguard High Dividend ETF pays $3.52 annually with a 2.42% yield but recently posted negative dividend growth.
The Vanguard Dividend Appreciation ETF offers 3.81% dividend growth and a sub-40% payout ratio despite its lower 1.6% yield.
The State Street SPDR S&P Dividend ETF has increased dividends for 20 consecutive years with 9.5% recent dividend growth.

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If You Want Retirement Income VYM Won’t Cut it, But These 3 ETFs Could — © Sutthiphong Chandaeng / Shutterstock.com

The Vanguard High Dividend ETF (NYSE:VYM | VYM Price Prediction) is widely considered to be one of the most popular income ETFs available today and for a number of very good reasons. Between its current $3.52 annual dividend payout and low payout ratio, there is every reason to believe that this ETF has the potential to be a cornerstone holding for millions of individual investor portfolios.

The thing is, with a 2.42% dividend yield and dividend growth that recently turned negative, the Vanguard High Dividend ETF is struggling to make a case for generating meanginful income without a very large portfolio to support it. In other words, investors who want reliable payouts and stronger income potential are starting to look elsewhere.

The Gap Between Yield and Retail Needs

For retirees in the market today, there has to be an income strategy that can keep up with inflation, all while supporting either monthly or quarterly withdrawals. A fund that offers a less than 3% yield might not be able to keep up with most withdrawal needs unless you have an exceptionally large account balance.

All of this means that investors who are looking for higher, more durable income often shift toward ETFs that can screen for dividend longevity, higher payouts, and stronger underlying cash flows. These alternatives will provide better support for a retirement plan when income must arrive on schedule, regardless of market conditions.

Vanguard Dividend Appreciation ETF

For its part, the Vanguard Dividend Appreciation ETF (NYSE:VIG) offers a demonstrated ability to grow dividends year after year. While it has a 1.6% dividend yield, it’s not the highest payer, but if you want consistency and market resilience, it’s a fantastic choice.

Better yet, the Vanguard Dividend Appreciation ETF is showing dividend growth of 3.81% and a payout ratio under 40%, signaling confidence to investors that its income stream has room to rise over time. Add in a $3.55 annual dividend right now, and retirees who are willing to trade a bit of yield for more growth and inflation protection, the Vanguard Dividend Appreciation ETF is a convincing choice. It should go without saying for retired investors, but the Vanguard Dividend Appreciation ETF remains one of the strongest long-term dividend vehicles available for you to invest in today.

SPDR S&P Dividend ETF

The State Street SPDR S&P Dividend ETF (NYSE:SDY) has a track record of 20 years of dividend increases, which should provide immediate and compelling confidence for investors. The dividend growth number is at 9.5%, which only adds to the compelling argument for this ETF.

Offering access to high-quality businesses in its holdings that have shown they can navigate recessions, rate cycles, and industry changes without breaking dividend streaks, the State Street SPDR S&P Dividend ETF and its $3.65 annual dividend payout give retirees predictable raises as part of their income plans, which is exactly what you should want. For retirees who want predictable raises built directly into their income plan, the State Street SPDR S&P Dividend ETF stands out.

iShares Core High Dividend ETF

Targeting high-quality US companies that are generating strong free cash flow, all with steady balance sheets, the iShares Core High Dividend ETF (NYSE:HDV) has a current 3.09% dividend yield and an annual dividend $3.78.

The fund currently has a heavyweight in sectors like energy, healthcare, and consumer staples, which historically perform well in slower economic periods. While dividend growth recently dipped, the iShares Core High Dividend ETF emphasizes quality metrics to keep its payout supported by the durable earning power of the companies sitting inside its portfolio at any given time. If you are a retired investor who wants a higher baseline yield without shifting into speculation territory, the iShares Core High Dividend ETF offers a compelling balance of income and stability.

Altogether, these ETFs provide retirees with stronger tools for generating income than the Vanguard High Dividend ETF can provide. Whether the priority is long-term dividend growth, higher current yield, or quality-driven consistency, these funds offer a more reliable path to building the solid retirement foundation that retired investors need.

About the Author David Beren →

David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.