3 Of the Best Dividend ETFs for Passive Investors Thinking Long-Term

Creating a meaningful portfolio of passive income is a worthwhile exercise for many investors. Those thinking long-term (either in the process of saving for retirement, or nearing retirement) can benefit from passive income streams over the long-term. That goes double for those who have such investments in tax-advantaged accounts, but that’s a whole other piece. 

In this article, I’m going to dive into three of my top dividend ETF ideas for long-term investors seeking passive income to grow one’s income stream over the long-term. Having more than one set passive income stream over one’s life can ease the burden of major life events such as job losses, temporary illness, or retirement. 

Let’s dive in!

Schwab U.S. Dividend Equity ETF (SCHD)

It should come as no surprise to most readers that the Schwab U.S. Dividend Equity ETF (SCHD) is the first dividend ETF I include on this list. That’s mostly because this is one of my top passive income holdings, and is one I follow closely. 

SCHD is the workhorse dividend ETF for investors who want to get paid now without sacrificing quality. This ETF tracks the Dow Jones U.S. Dividend 100 Index, a rules-based basket of 100 high‑quality U.S. dividend payers. Importantly, this ETF’s portfolio companies are screened for sustainable payouts, strong cash flow, and attractive fundamentals. Think industrials, consumer staples, healthcare, energy, and financials, all companies tilted toward value and vetted for balance-sheet strength.

The fund’s expense ratio sits at a rock-bottom 0.06%, meaning you’re barely paying anything for a fully managed, rules-driven portfolio of blue-chip dividend names. With a current dividend yield near 3%, investors are getting more than double what investors get from many broad-market ETFs today. Additionally, SCHD’s price-to-earnings ratio sits in the high‑teens, giving you a modest valuation discount versus many growth-heavy benchmarks. That’s all the while its sector mix leans into defensive, cash-generative franchises built to weather downturns.

Sum it all up, and SCHD seems like one of the best long-term dividend fund holdings to own right now. I’m eating my own cooking with this one. 

Vanguard Dividend Appreciation ETF (VIG)

Another top dividend-focused ETF I have on my watch list is Vanguard Dividend Appreciation ETF (VIG).

This ETF is the long-haul compounder that quietly builds wealth in the background. VIG tracks the S&P U.S. Dividend Growers Index, which holds U.S. companies that have increased their dividends for at least 10 consecutive years. That screen tilts the portfolio toward mega‑cap quality (stable earnings, strong balance sheets, and management teams that treat the dividend like a sacred obligation).

The fund’s expense ratio is razor thin at roughly 0.04%, making it one of the cheapest ways to own a diversified basket of dividend-growth leaders. The trade-off is a lower headline yield (around 1.6%), however the real story is growth. Since inception, VIG’s average annual return has been in the low double-digits. The ETF holds more than 300 stocks, carries a below‑market beta near 0.85, and sports a mid‑20s price-to-earnings ratio. That’s value I can get behind.

Investors should want exposure to VIG because dividend growth is one of the most underappreciated wealth-building factors in the market. Instead of chasing today’s highest yield, VIG owns companies that raise their payouts year after year, helping investors keep pace with inflation and steadily increase their income without touching principal. For long-term, passive-income seekers (especially those in accumulation mode), VIG offers a “sleep at night” blend of quality, diversification, and growing cash flows worth buying now. 

Vanguard High Dividend Yield ETF (VYM)

Last, but certainly not least, we have the Vanguard High Dividend Yield ETF (VYM). 

VYM is the blunt-force tool for investors who want instant, diversified exposure to high-yielding U.S. stocks without stock-picking risk. The ETF tracks the FTSE High Dividend Yield Index, targeting U.S. companies forecast to pay above-average dividends and explicitly excluding REITs. The result is a portfolio of 400-500 names spread across sectors like financials, consumer staples, healthcare, energy, and industrials, with heavy representation from mature, cash-rich blue chips.

This fund’s expense ratio is a microscopic 0.04%, which is about as close to free as investors can hope for in a diversified equity income product. With a current yield of 2.3% (roughly a full percentage point higher than many large-value benchmarks), This ETF has historically lower volatility than its category peers. The fund’s top 10 holdings typically account for roughly a quarter of assets, but exposure is spread across hundreds of stocks, sharply reducing single-name risk.

The key reason to own VYM is simple. This fund delivers broad, low-cost yield without forcing you into narrow sectors or speculative names. Its market-cap-weighted methodology naturally emphasizes larger, more stable firms while limiting exposure to distressed, ultra‑high-yield “value traps.” That makes VYM a compelling core holding for retirees and long-term investors who want higher income than the market, reasonable growth potential, and a risk profile anchored by blue-chip balance sheets.