Investing in high-dividend yield exchange-traded funds (ETFs) can provide investors with a steady income stream and potentially lower portfolio volatility, which is particularly attractive for long-term investors or those nearing retirement. However, it is crucial to balance your desire for a high yield with a focus on quality underlying fundamentals to avoid value traps.
Quality high-yield ETFs can provide regular passive income, which can be invaluable for investors looking to compound their wealth by reinvesting dividends. In addition, dividend-paying companies contained in these ETFs are typically mature and financially stable.
If you’re looking for high-dividend ETFs to invest in right now, here are two names to consider for your portfolio.
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The SPDR Portfolio S&P 500 High Dividend ETF(NYSEMKT: SPYD) tracks the performance of the top 80 high-dividend-yielding companies within the S&P 500. This passively managed fund trades for about $43 per share, offers a higher dividend yield than the broader S&P 500 index (around 1.2%), and has significant sector concentration in areas including real estate, utilities, and financials. The ETF’s trailing 12-month dividend yield is approximately 4.5%. It has a very low expense ratio of 0.07%, which means that a $10,000 investment in this ETF would cost just $7 a year in fees.
The fund’s index selects the 80 highest-yielding stocks from the S&P 500 and weights them equally. The index is rebalanced semi-annually, and the fund currently has over $7.3 billion in net assets under management. The SPDR Portfolio S&P 500 High Dividend ETF’s top sector exposure by weighting includes: real estate (21.4%), utilities (13.4%), financials (17.3%), and consumer staples (16.3%).
As of late 2025, the ETF has minimal exposure of less than 2% to the tech sector, an industry that has driven broad market gains in the last few decades. Historically speaking, the ETF’s capital appreciation has remained much lower than the broader market: it’s delivered a total return of about 130% since its inception in 2015, compared to the more than 300% total return of the S&P 500 in the same period. The fund’s top holdings include CVS Health, Viatris, Invesco, Merck, Ford, AbbVie, and US Bancorp.
One caveat to be aware of: The SPDR Portfolio S&P 500 High Dividend ETF’s dividends are taxed as ordinary income rather than capital gains because the fund holds significant investments in various real estate investment trusts (REITs), which are pass-through entities whose distributions have a different tax structure.
If you’re an investor with a more conservative risk tolerance looking to invest in the highest-yielding companies within the vetted S&P 500 universe, the SPDR Portfolio S&P 500 High Dividend ETF could be a low-cost, no-brainer option to put cash into a basket of great businesses that can help drive your portfolio returns in the years ahead.
Schwab US Dividend Equity ETF(NYSEMKT: SCHD) currently trades at around $28 per share, with a yield of approximately 3.8%. The ETF aims to mirror the performance of the Dow Jones U.S. Dividend 100 Index, and filters for companies with strong balance sheets, high profitability, and a history of consistent dividend payments.
The fund naturally tilts toward sectors like energy (19.34%), consumer staples (18.5%), and healthcare (16%), an approach that can provide investors stability through various economic cycles. The ETF holds around 100 stocks, including major names like Bristol Myers Squibb, Cisco, ConocoPhillips, PepsiCo, Lockheed Martin, Coca-Cola, and Verizon. It has just shy of $73 billion in assets under management.
Companies with market capitalizations of $70 billion or higher comprise over 58% of the Schwab US Dividend Equity ETF’s portfolio, so investors benefit from dividend income from some of the most established companies in the world. The fund’s expense ratio is quite low at 0.06%.
Over the last decade, the ETF has delivered a total return of more than 200%. While that’s behind the S&P 500’s performance, it still works out to an annualized return of about 11% to 12%, depending on the year. If you want to buy a basket of blue-chip dividend-paying companies, this ETF could be just what you’re looking for.
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Rachel Warren has positions in AbbVie. The Motley Fool has positions in and recommends AbbVie, Bristol Myers Squibb, Cisco Systems, Merck, and U.S. Bancorp. The Motley Fool recommends CVS Health, ConocoPhillips, Lockheed Martin, and Verizon Communications. The Motley Fool has a disclosure policy.
