VIG, SCHD and VYM Dividend ETFs Are Poised to Rip Higher Through the Rest of 2025

For investors looking to create meaningful and reliable income streams for retirement (or any other reason, for that matter), finding the right investing vehicles is the most important first step in this process.

I’ve long been of the view that picking and choosing a handful or more of top dividend stocks I think can both weather the test of time, and also provide meaningful dividend growth over that time frame, makes sense. However, stock picking isn’t for everyone, and there do happen to be a number of excellent low-cost vehicles for investors looking to garner exposure to dividend stocks that are worth considering.

Key Points

• Plenty of individual stocks and exchange traded funds can provide investors with long-term exposure to dividend paying stocks that’s worth adding to a portfolio right now.

• That said, these three top ETFs could be among the best picks for investors looking for low-cost diversification in this macro backdrop.

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In this article, I’m going to highlight three top exchange traded funds (ETFs) that do look well positioned to see significant gains through the rest of the year.

Vanguard Dividend Appreciation ETF (VIG)

One of the most important (and in my view, least appreciated) benefits that dividend stocks can provide long-term investors is yield growth over time. Unlike other fixed assets like bonds that pay a prescribed interest rate on a pre-set schedule, dividend stocks have the ability (and in many cases, the perceived duty) of raising their distributions each and every year. Thus, an ETF such as the Vanguard Dividend Appreciation ETF (VIG) is an excellent option for investors looking to ramp up one’s passive income stream before or during retirement.

This ETF is notable not only for its 0.05% expense ratio (very low, even in the ETF space) but also its dividend yield of nearly 1.9%. That’s considerably higher than what investors would receive by buying most index-tracking ETFs. Now, a yield of less than 2% may not be as attractive to passive income investors as one might think. But paired with the capital appreciation upside of the stocks held in this fund, and the more than $86 billion of assets under management for VIG, this is a top option worth considering in this space.

What I like most about VIG is the blue chip nature of the fund’s holdings, and its relatively low turnover ratio of around 11% (which optimizes this fund from a tax perspective). For those seeking high-quality exposure to mostly U.S. dividend stocks, this is a great pick in my view.

Schwab U.S. Dividend Equity ETF (SCHD)

For investors looking to stay closer to home and focus on the highest-quality U.S. dividend paying stocks, the Schwab U.S. Dividend Equity ETF (SCHD) is a great option to look at. This fund focuses on the highest-yielding U.S. dividend stocks, but also screens stocks on the basis of quality. Metrics such as cash flow and return on equity are used to pick the best high-yielding stocks from the Dow Jones U.S. Dividend 100 Index, meaning investors gain access to the largest and most established high yield plays in the equity market with this ETF.

Given the concentration of holdings, SCHD is perhaps less diversified than other options in this space. But with an expense ratio right around where VIG is (at 0.06%) and a dividend yield of more than 4%, there’s a lot to like about this ETF in terms of its long-term total return opotential.

I think this fund’s disciplined selection criteria with a focus on quality (in addition to dividend yield) makes this fund one investors would be remiss to ignore right now. That’s my opinion, anyway.

Vanguard High Dividend Yield ETF (VYM)

Investors looking for a bit more diversification in their search for higher yields may be better suited by investing in a fund such as the Vanguard High Dividend Yield ETF (VYM). This ETF, similar to SCHD, focuses on companies with the highest dividend yields in the overall market. This means that VYM provides exposure to more than 500 stocks, providing a great deal more diversification than SCHD at the same expense ratio of just 0.06%.

What this extra diversification means is that investors will bring home a slightly lower yield, at around 3%. But given the heavier weighting this fund has toward financials, healthcare and technology stocks, there’s some additional growth upside that should be taken into consideration as well.

Given the quality of the companies held in this fund and its broader base, there’s an argument this pick could be the most well-balanced for long-term investors seeking yield. Personally, I think a portfolio that consists of each of these ETFs should outperform over the long-term. That said, investors ought to pick their holdings (ETFs included) on the basis of their own individual goals and risk preferences, so these three options may not be well-suited for all investors – but they’re a great place to start one’s search!

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