5 ETFs That Combine Dividend Income With Intense Growth

Many investors nearing retirement and those already in retirement turn to dividend ETFs for a reliable and steady stream of income through equities in a diversified portfolio.

But retirement could still be several years away. And the average retirement can last 20 or more years. So you’d still want to be invested in something that could offer growth potential.

Luckily, several divided ETFs are designed to accomplish this. These include divided ETFs that focus on companies with strong financials and histories of consistently delivering and increasing dividends over time. Many of these offer high yields, competitive expense ratios and engage in alternative methods of generating income while preserving growth.

So to make it easier to pick the right ones, we created a list of the 5 ETFs that combine dividend income with intense growth.

Here are the picks.

Vanguard Dividend Appreciation ETF (VIG)

The Vanguard Dividend Appreciation ETF (VIG) delivers income by investing in large-cap companies with a track record of increasing their dividends year over year. Companies that can do this could have the potential to also deliver significant capital growth. VIG generates a yield of about 1.62% and it has a five-year return of around 58%.

The fund’s main holdings are in information technology, financials and healthcare. Its main focus, the IT sector, has benefited from the rise of artificial intelligence (AI). This could also help the fund provide investors with intense growth.

Moreover, Vanguard stands out in the industry for its low-fee funds. And VIG is no exception. It has a significantly low expense ratio of 0.05%. And it holds net assets of about $119.98 billion

Schwab U.S. Dividend Equity ETF (SCHD)

The Schwab U.S. Dividend Equity ETF (SCHD) also stands out for a low expense ratio of 0.06%. But there’s more. SCHD focuses on high-quality companies with strong fundamentals and sustainability of dividend payments. And it has a high yield of around 4%. These characteristics could boost your portfolio with reliable income and growth.

Additionally, SCHD has delivered a five-year return of over 32%. Its main holdings are in the energy, consumer staples and healthcare sectors. The latter two are categorized as defensive sectors, which have historically stood resilient even during market downturns. Additionally, SCHD has net assets of $71.64 billion.

iShares Core Dividend Growth ETF (DGRO)

The iShares Core Dividend Growth ETF (DGRO) invests in companies with records of consistently increasing dividends over time. This could give your portfolio exposure to high-quality stocks with growth potential, while providing a reliable stream of income. In fact, DGRO has earned a four-star Morningstar rating against 1,059 large value funds based on risk-adjusted total returns. The fund has generated a five-year return of nearly 56%. It also earned Morningstar’s gold medalist rating. And it currently offers a yield of about 2%. Its top holdings include stocks in the financials, healthcare and information technology sectors. And it has total net assets of about $36 billion.

Vanguard High Dividend Yield ETF (VYM)

The Vanguard High Dividend Yield ETF (VYM) can drive strong growth and income as it invests in companies projected to have above-average dividend yields. This could also give investors some peace of mind. Its holdings are centered around financials, technology and industrials.

The VYM has a five-year return of nearly 58% and delivers a yield of around 2.44%. And it offers investors a low expense ratio of 0.06%. According to Vanagurd’s research, the average expense ratio of similar funds is 0.86%.

Moreover, it stands out for wide diversification by investing in nearly 600 stocks across 10 market sectors. Plus, VYM has net assets of $84.52 billion.

JPMorgan Equity Premium Income ETF (JEPI)

The JPMorgan Equity Premium Income ETF (JEPI) takes a dual approach to generating income by selling options
and investing in U.S. large-cap stocks.

As an actively managed fund, JEPI utilizes proprietary research to seek out over- and-undervalued stocks that could offer low volatility, as well as favorable risk/return profiles. The fund has earned a Silver medalist rating from Morningstar.

Plus, JEPI offers the highest yield on our list at about 8.25%. And it has a five-year return of about 4%. But being an actively managed fund, it has a higher expense ratio than other funds on our list at 0.35%. However, this is still competitive compared to other actively managed funds.

Among its top holdings are information technology, healthcare and financials. A large portion of its portfolio is taken up by tech giants in the Magnificent Seven group. Moreover, the fund has net assets of $41.49 billion.