Start investing in dividend stocks can be done for example with a basket of 15+ different individual dividend stocks to accomplish differentiation and risk reduction. Alternatively, you could start with one or more dividend ETFs and even with little money. The question is what is the best dividend ETF? Here is an update on the year-to-date return.
Earlier this year, we analyzed 10 dividend ETFs and answered the question “What is the best dividend ETF for long-term performance?”, the results can be found on the page Top-5 Best Dividend ETF’s.
As a starting point for the best dividend ETFs for 2022 we analyzed the following dividend ETF’s:
| Dividend ETF | Symbol |
| iShares Core Dividend Growth ETF | DGRO |
| WisdomTree U.S. Dividend Growth ETF | DGRW |
| ProShares S&P 500 Dividend Aristocrats ETF | NOBL |
| Vanguard Dividend Appreciation ETF | VIG |
| Vanguard High Dividend Yield ETF | VYM |
As a first checkpoint, we looked at the total return of the 5 dividend ETFs and compared it with the S&P 500 index performance year-to-date in 2021. It is good to see that the ETF’s can follow the S&P 500 index. However, none of the 5 dividend ETFs were able to beat the S&P 500 index. The Vanguard Dividend Appreciation ETF has the worst underperformance with almost 6%.
However, over a 5 years period, the Vanguard Dividend Appreciation ETF paints a different picture and is the best performing dividend ETF.
See here how an initial investment of $100,000 could have grown over the last 5 years.
Our top-5 Dividend ETFs for 2022 are:
- VIG
- DGRW
- DGRO
- NOBL
- VYM
Based on the 1 & 5 year total returns, high yield dividend is not the place to be, so the Vanguard High Dividend Yield ETF (VYM) is number 5. The Dividend Aristocrats (NOBL) is probably the most well-known index for global dividend investors and a stable factor in a dividend portfolio. The low percentage allocation to the Technology sector is one of the main reasons why the NOBL-ETF is underperforming and on spot 4.
The top-3 Dividend ETFs are all strong performers over 1, 3, and 5 years. The WisdomTree U.S. Dividend Growth ETF (DGRW) is the most expensive one with an annual fee of 0.28%.
Below is more data on the five dividend ETFs discussed and the option to download to an excel-file format. Data retrieved from etf.com & Morningstar on 24/12/2021.
| wdt_ID | ETF Name | Symbol | Criteria | Weighting | 1 year TR | 3 years TR | 5 years TR | 10 years TR | Top Sector | Bottom Sector | Top 10 | P/E | Holdings | Index | Bloomberg Ticker | $100,000 investment 5 years ago | Financial Crisis | Covid-19 | Yield |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Vanguard High Dividend Yield ETF | VYM | Yield | Market | 31.53 | 9.39 | 10.93 | 13.35 | Financials | Materials | 2467.00{2487ecbc3eea4ba2f668a39bc5bdfe862529393035b51ec655221d8604add08c} | 25.16 | 417 | FTSE High Dividend Yield Index | TGPVAN Index | 0.00 | -52.37 | -32.80 | 3.19 |
| 2 | ProShares S&P 500 Dividend Aristocrats ETF | NOBL | Yield | Equal | 18.78 | 14.11 | 13.88 | n.a. | Industrials | Telecommunications | 1737.00{2487ecbc3eea4ba2f668a39bc5bdfe862529393035b51ec655221d8604add08c} | 29.01 | 66 | S&P 500 Dividend Aristocrats | SPDAUDT Index | 0.00 | -42.29 | -32.95 | 2.14 |
| 3 | Vanguard Dividend Appreciation ETF | VIG | Quality | Market | 21.42 | 13.61 | 15.04 | 14.49 | Consumer Cyclicals | Telecommunications | 3461.00{2487ecbc3eea4ba2f668a39bc5bdfe862529393035b51ec655221d8604add08c} | 29.25 | 216 | NASDAQ US Dividend Achievers Select Index | DVGTR Index | 0.00 | -41.76 | -28.82 | 1.67 |
| 4 | iShares Core Dividend Growth ETF | DGRO | Yield | Dividends | 28.92 | 13.40 | 15.40 | n.a. | Financials | Materials | 2500.00{2487ecbc3eea4ba2f668a39bc5bdfe862529393035b51ec655221d8604add08c} | 23.08 | 412 | Morningstar U.S. Dividend Growth Index | MSDIVGT Index | 0.00 | -43.76 | -32.46 | 2.33 |
| 5 | WisdomTree U.S. Dividend Growth ETF | DGRW | Yield | Dividends | 20.37 | 15.76 | 16.63 | n.a. | Technology | Energy | 3655.00{2487ecbc3eea4ba2f668a39bc5bdfe862529393035b51ec655221d8604add08c} | 26.91 | 266 | WisdomTree U.S. Quality Dividend Growth Index | WTDGITR Index | 0.00 | 0.00 | -29.35 | 1.93 |
| 6 | Vanguard 500 Index Fund ETF | VOO | Quality | Market | 29.98 | 15.96 | 16.86 | 16.59 | Technology | Energy | 2800.00{2487ecbc3eea4ba2f668a39bc5bdfe862529393035b51ec655221d8604add08c} | 33.85 | 500 | S&P 500 Index | SPTR Index | 0.00 | -50.82 | -30.61 | 1.56 |
Other Sources of Dividend Investment Ideas
There are several lists to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Aristocrats Index is based on 64 companies part of the S&P 500 and with 25+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
- The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market in the long-term.
- Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
- For the European focused investors, there is also the list of European Dividend Aristocrats.
- Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
- 100+ years of dividend, the list of stocks that pay over 100 years of dividend can be a list of inspiration.
- Blue Chips stocks from the US or the European ones.
Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.
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