The 3 Dividend ETFs You Should Put In Your Stocking And Keep There for a Decade or Longer

There are plenty of dividend stocks out there for equity investors looking to maximize their overall total portfolio returns. Dividends can play a significant role in generating long-term returns, with around one-third of the cumulative returns of the stock market coming from dividends over the long-term. 

Now, this current market is dominated by high-growth stocks, many of which don’t provide meaningful yields (if there are dividends paid out, many top tech companies have a yield well less than 1%). For passive income aficionados out there, that may not be enough to justify one’s long-term passive income generation goals.

That said, I do think there are a number of top exchange traded funds (ETFs) tracking broad baskets of dividend stocks that are worth considering. Here are three of my top ideas for those with a long-term investing time horizon of a decade or more to consider. 

Vanguard International Dividend Appreciation ETF (VIGI)

Vanguard is one of my top ETF providers I prefer, in part due to this company’s history in being the first and one of the broadest ETF providers in the market. I’ve got another top pick on this list that comes from Vanguard as well, but the Vanguard Global Ex-U.S. Dividend Growers ETF (VIGI) is one of the top stocks on my watch list right now. 

What I like about this top ETF is the fact that VIGI explicitly invests in top dividend-paying stocks outside of the U.S. That’s because I think too many investors (and myself can be included in this group, at least in the past) have allocations toward U.S. stocks that are outside the guardrails of conservative investing principles. International exposure in many Americans’ portfolios has declined in recent years, partly driven by a steep run-up in U.S. asset prices. In other words, it’s been beneficial to go “all-in” on U.S. stocks, and forget the rest of the world.

That said, the reality is that these dynamics are changing. International stocks outpaced U.S. stocks this past year in terms of performance, and I think that’s a trend that can continue, in part due to the current geopolitical and trade/tariff dynamics at play. 

For those looking for a diversified basket of international dividend stocks (which pays a current annualized yield of 1.9%) and has a focus on quality, this would be my preferable choice. Notably, this ETF is heavily concentrated in areas of the global economy the U.S. stock market isn’t as focused – with healthcare and consumer defensive stocks occupying top positions. Thus, for defensive dividend upside, VIGI is an excellent pick.

Vanguard U.S. Dividend Appreciation ETF (VIG) 

The Vanguard U.S. Dividend Appreciation ETF (VIG) is the flip side of the coin, providing investors with exposure to some of the best American dividend stocks out there. I still think owning a large allocation toward U.S. stocks makes sense for many investors, mostly due to the quality profile of such companies. And with VIG, investors gain exposure to not only dividend-paying companies, but those who have a long track record of raising their dividends over time. 

This ETF tracks the S&P U.S. Dividend Growers Index, which tracks companies that have raised their dividends each year for at least a decade straight. In doing so, much of the riffraff out there – companies that have stopped and started dividend distributions, held them steady, or are too early along in their dividend growth journey – are excluded from the ETF. 

I think that’s an important distinction for VIG relative to other dividend ETFs out there, many of which focus on up-front yield and other metrics over dividend sustainability and dividend growth. I’d argue those two factors matter more than the ultimate yield investors receive today. 

With an expense ratio of just 0.05% and a dividend yield of 1.6% (which will increase over time, along with each portfolio holding hiking distributions), this is an excellent option for long-term investors banking on interest rates and inflation coming down.

iShares Core Dividend Growth ETF (DGRO)

Last, but not least, I’d like to touch on the iShares Core Dividend Growth ETF (DGRO). This is an ETF I’ve featured in the past, largely due to similar dynamics as my aforementioned pick in VIG.

The DGRO ETF also focuses on providing investors with exposure to some of the fastest growing dividend stocks in the market, wiht sustainable payout ratios in various sectors. With more than 400 holdings in this fund, and meaningful exposure to financials, IT, healthcare and industrial stocks, there’s also a defensive exposure to this ETF I think investors looking for balance and diversification can jump on. 

With a reasonable valuation for this ETF’s overall portfolio and an expense ratio around 0.08%, there’s a lot to like about the potential upside DGRO provides relative to its overall cost. This ewe eking the sort of sustainable dividend growth I’d argue should be a central focus for investors over the long-term.