It’s funny, isn’t it? For years, we financial advisors told people to get into bonds. “Safety,” we said. “Predictability.” Meanwhile, the yields were so low, you’d earn more stuffing cash under your mattress – and at least then you’d have something to sit on. My Aunt Mildred, God love her, actually tried that. She complained about the lumpiness, naturally. Then 2022 happened, and suddenly all those long-dated bonds weren’t so safe. They lost value, and Mildred just kept muttering about springs. It’s a good thing she doesn’t manage money.
The iShares 20+ Year Treasury Bond ETF? Down 11% over the last decade. It’s still forty percent off its high. Forty percent! You could buy a used car for that kind of discount. The iShares iBoxx $ Investment Grade Corporate Bond ETF did a little better, returning about 32%, but let’s be honest, “a little better” doesn’t exactly inspire confidence. It’s been lean times for fixed income, and frankly, I’m starting to think it might stay that way. Inflation is stubborn, federal debt is…well, it’s federal debt, and unless everyone suddenly decides Treasury bonds are the new fidget spinners, we’re stuck.
So, I started looking at dividends. Not because I suddenly became an expert in dividend investing—I’m a portfolio manager, not a fortune teller—but because desperation is a powerful motivator. And, frankly, it’s a nice change of pace from explaining to clients why their bond portfolios are underperforming. These dividend ETFs invest in companies that actually, you know, make things. Durable, financially healthy things. They kick off dividends, which, as far as I can tell, is just a way of giving money back to investors. It’s almost…generous. Plus, you get the potential for equity upside. It’s a win-win, or at least a win-less-loss.
Here are three dividend ETFs that I’ve been cautiously optimistic about. Cautiously, because optimism is a dangerous emotion in this business.
1. Schwab U.S. Dividend Equity ETF
The Schwab U.S. Dividend Equity ETF (SCHD +0.49%) is popular, and for good reason. It’s like they took all the things people like—dividend history, healthy balance sheets, high yields—and just threw them into a blender. It’s a three-pronged strategy, which sounds impressively scientific, but mostly just means they’re covering their bases. It avoids the bad apples, which is always a good thing. My colleague, Kevin, once invested in a company that made self-folding laundry. It didn’t end well. This ETF seems a little more…grounded.
It’s been a stellar performer in 2026 after a few years of struggles. It’s not going to lead when tech stocks are soaring, but it does well more often than not. And a 3.5% dividend yield is attractive, especially when you’re explaining to clients why their bond portfolios are still underwater.
2. Vanguard High Dividend Yield ETF
The Vanguard High Dividend Yield ETF (VYM +1.04%) is another popular choice, but it’s a bit more…straightforward. They start with a universe of dividend-paying stocks and just pick the top half based on forecasted yields. It’s like picking lottery numbers, but with more spreadsheets. It’s imprecise, but it’s also simple. My grandmother always said, “Keep it simple, dear. And always wear sensible shoes.” I’m not sure what sensible shoes have to do with investing, but she was a wise woman.
It’s market cap-weighted, which means the biggest companies get the biggest allocations, regardless of yield. That pulls the current yield down to 2.3%, which is historically low. But it’s still double the yield of the S&P 500, so…progress, I guess.
3. iShares Core Dividend Growth ETF
The iShares Core Dividend Growth ETF (DGRO +0.80%) doesn’t have the highest yield, but it focuses on dividend durability and growth. They give greater weightings to stocks that pay out more in dividends. It’s like rewarding good behavior. It targets stocks with at least a five-year dividend growth streak and a payout ratio of 75% or less. It produces a portfolio with a stronger quality tilt and a sustainable dividend profile. It doesn’t always equate to a high yield, but its current 2% yield is enough to help fill the income gap in a portfolio.
Look, I’m not saying dividend ETFs are a magical solution. Nothing is. But they’re a slightly less depressing alternative to bonds right now. And sometimes, in this business, that’s the best you can hope for.
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2026-03-24 15:43