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 ETF’s and even with little money. The question is what is the best dividend ETF?

Five Dividend ETF Analyzed

There are several (high-)dividend equities indices available to invest in via ETFs, like the S&P 500 Dividend aristocrats (NOBL). In this analysis, we will check which of these five ETFs performed best over the last five years. Next to performance, we also look at draw-downs during COVID-19 crisis in 2020. What is the best dividend ETF for long-term performance? Find out below!

As a first step, we looked at ten well-known dividend ETF’s:

Dividend ETF Symbol
iShares Core Dividend Growth ETF DGRO
WisdomTree U.S. Dividend Growth ETF DGRW
iShares Select Dividend ETF DVY
ProShares S&P 500 Dividend Aristocrats ETF NOBL
Schwab U.S. Dividend Equity ETF SCHD
SPDR S&P Dividend ETF SDY
Invesco S&P 500 High Dividend Yield Low Volatility Portfolio ETF SPHD
SPDR S&P 500 High Dividend ETF SPYD
Vanguard Dividend Appreciation ETF VIG
Vanguard High Dividend Yield ETF VYM

 

After a first scan, I became clear that high dividend ETF’s are not the best for long-term performance. In this article, we will focus on the best five dividend ETF’s versus the S&P 500 index tracker (VOO). Surprisingly, none of the five dividend ETF’s did beat the S&P500 index when it comes to total return over last 5 years. See here how an initial investment could have grown over the last 5 years. The WisdomTree U.S. Dividend Growth ETF is the most closes one.

dividend-etf-5-year-total-return

We also look at draw-downs during the COVID-19 crisis in 2020. The Vanguard Dividend Appreciation ETF was the ETF with the lowest draw-down during the first COVID-19 impact from 02/20/2020 – 03/23/2020.

Covid total return dividend-etfs

 

 

Here are more details on the top 5 dividend etf’s.

#5 Vanguard High Dividend Yield ETF

Vanguard High Dividend Yield ETF
Ticker VYM Criteria Yield
Benchmark FTSE High Dividend Yield Index Weighting Market-cap.
Holdings 412 Dividend Yield
3.19%
5 years performance
11.72% Covid-19 Performance
-32.80%
Annual costs
0.06% p.a.

 

#4 ProShares S&P 500 Dividend Aristocrats ETF

ProShares S&P 500 Dividend Aristocrats ETF
Ticker NOBL Criteria Yield
Benchmark S&P 500 Dividend Aristocrat Weighting Equal.
Holdings 65 Dividend Yield
2.14%
5 years performance
13.57% Covid-19 Performance
-32.95%
Annual costs
0.35% p.a.

 

#3 Vanguard Dividend Appreciation ETF

Vanguard Dividend Appreciation ETF
Ticker VIG Criteria Quality
Benchmark NASDAQ US Dividend Achievers Select Index Weighting Market-cap.
Holdings 214 Dividend Yield
1.67%
5 years performance
16.02% Covid-19 Performance
-28.82%
Annual costs
0.06% p.a.

 

#2 iShares Core Dividend Growth ETF

iShares Core Dividend Growth ETF
Ticker DGRO Criteria Yield
Benchmark Morningstar U.S. Dividend Growth Index Weighting Dividends
Holdings 411 Dividend Yield
2.33%
5 years performance
16.17% Covid-19 Performance
-32.46%
Annual costs
0.08% p.a.

 

#1 WisdomTree U.S. Dividend Growth ETF

WisdomTree U.S. Dividend Growth ETF
Ticker DGRW Criteria Yield
Benchmark WisdomTree U.S. Quality Dividend Growth Index Weighting Dividends
Holdings 266 Dividend Yield
1.93%
5 years performance
16.55% Covid-19 Performance
-29.35%
Annual costs
0.28% p.a.

 

Data retrieved from etf.com & Morningstar on 2/6/2021. Below more data on the five dividend ETFs discussed and the option to download to an excel-file format.

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 3.97 7.75 11.72 11.51 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 9.30 11.73 13.57 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 11.72 14.24 16.02 12.45 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 9.61 12.89 16.17 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 13.07 12.77 16.55 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 18.65 15.85 17.92 13.77 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.

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.

Also, our monthly newsletter and premium member data will help you to invest smarter.

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