The Best Dividend ETFs and Mutual Funds for Steady Income

If you want to build wealth through a steady, reliable income, dividend-paying ETFs and mutual funds are a great place to start. Whether you're reinvesting dividends for compounding or collecting payouts for passive income, having the right mix of assets can make a huge difference.

In this post, we’ll examine some of the most popular and high-quality dividend ETFs and mutual funds and explain what makes each one worth considering.

Top Dividend ETFs

These ETFs offer a convenient way to access a diversified portfolio of dividend-paying stocks, often with low fees and great performance over time.

1. Vanguard Dividend Appreciation ETF (VIG)

• Dividend Yield: ~2%

• Strategy: Invests in U.S. companies with 10+ years of consistent dividend growth.

• Why It’s Great: Focuses on stability and long-term growth over high yield.

2. Vanguard High Dividend Yield ETF (VYM)

• Dividend Yield: ~3–3.5%

• Strategy: Targets large-cap U.S. companies with higher-than-average yields.

• Why It’s Great: Balanced mix of income and stability.

3. SPDR S&P Dividend ETF (SDY)

• Dividend Yield: ~2.5–3%

• Strategy: Invests in companies with 20+ years of consecutive dividend increases.

• Why It’s Great: Strong dividend track records = long-term reliability.

4. iShares Select Dividend ETF (DVY)

• Dividend Yield: ~3.5%

• Strategy: Focus on U.S. companies with high yields, especially in utilities and industrials.

• Why It’s Great: Higher income potential, though more sector-focused.

5. Schwab U.S. Dividend Equity ETF (SCHD)

• Dividend Yield: ~3.5–4%

• Strategy: Screens for quality U.S. companies with sustainable dividends and strong fundamentals.

• Why It’s Great: Low-cost, high yield, and very popular with long-term investors.

6. ProShares S&P 500 Dividend Aristocrats ETF (NOBL)

• Dividend Yield: ~2.5%

• Strategy: Includes companies in the S&P 500 with 25+ years of dividend increases.

• Why It’s Great: Ultra-consistent dividend growers.

Top Dividend Mutual Funds

Prefer active management or a more hands-off approach? These mutual funds offer expert-selected portfolios focused on long-term dividend income and capital appreciation.

1. Vanguard Dividend Growth Fund (VDIGX)

• Dividend Yield: ~1.8%

• Strategy: Blue-chip companies with potential for dividend growth.

• Why It’s Great: Low cost, great track record, and steady growth.

2. T. Rowe Price Dividend Growth Fund (PRDGX)

• Dividend Yield: ~1.5–2%

• Strategy: High-quality companies with strong fundamentals and growing dividends.

• Why It’s Great: Reliable and conservative with strong management.

3. Fidelity Strategic Dividend & Income Fund (FSDIX)

• Dividend Yield: ~2.5–3%

• Strategy: Combines dividend-paying stocks, preferred shares, and REITs.

• Why It’s Great: Diversified approach to generating income.

4. Columbia Dividend Income Fund (LBSAX)

• Dividend Yield: ~2.5%

• Strategy: Focus on value stocks with consistent dividend histories.

• Why It’s Great: Solid choice for conservative investors looking for income and capital preservation.

Which One Is Right for You?

Here's a quick guide to help you decide:

Final Thoughts

Dividend ETFs and mutual funds can play a powerful role in any portfolio — whether you're just getting started or looking to live off passive income. The key is to align your picks with your financial goals, risk tolerance, and timeline.