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Most financial advisors will tell you about a dozen or so dividend EFTs that they tell everyone about. Your financial advisor likely does not know about VictoryShares US Large Cap High Dividend Volatility Weighted ETF (NASDAQ:CDL), Pacer American Energy Infrastructure ETF (NYSEARCA:USAI), and AAM S&P 500 High Dividend Value ETF (NYSEARCA:SPDV). These are more under-the-radar names that are built to last and have solid compositions.
Of course, I’m not bashing more popular monthly dividend EFTs. It’s just better to diversify a portion of your portfolio into lesser-known names, as the high-yield dividend ETFs today are mostly covered-call ETFs with tech holdings masquerading as “safe” dividend ETFs.
What you instead want are true monthly payers with cash-rich holdings that can snowball your portfolio over time. The ETFs below do just that.
VictoryShares US Large Cap High Dividend Volatility Weighted ETF (CDL)
This ETF is passively managed and was launched over a decade ago. It harvests dividend income from large-cap U.S stocks without the pitfalls that come with traditional indexing methods. It replicates the performance of the Nasdaq Victory US Large Cap High Dividend 100 Volatility Weighted Index. That index starts with the 500 largest, most profitable U.S. companies, then narrows the field to the top 100 by dividend yield. What sets it apart is that it does not weight those 100 stocks by market cap or raw yield.
You’re instead getting stocks that are weighted by inverse volatility. Stocks that have less volatility get a bigger slice of the portfolio, and the stocks that are more volatile get pushed out.
The result is an impressive and underappreciated ETF that most investors aren’t aware of.
CDL is up 7.1% year-to-date already. What’s better is that it yields 3.17% with a monthly distribution. The expense ratio is just 0.35%.
Pacer American Energy Infrastructure ETF (USAI)
This is a rules-based ETF that has been delivering explosive gains in recent months. It does not bet on oil drillers or refiners and instead holds midstream energy infrastructure stocks exclusively. These midstream companies do not have direct exposure to wild swings in oil or gas prices and are involved in storage and transport. Thus, you have good exposure to the long-term uptrend of energy usage without involving yourself on the frontlines.
Midstream stocks have benefited significantly from global energy volatility, though. With the Strait of Hormuz being closed and Russia being under unprecedented sanctions, European countries have turned to North America. Pipelines are now more active than ever as energy flows to the ports alongside domestic endpoints.
You get 4.14% dividend yield here. USAI is up 21.7% year-to-date. The expense ratio is a bit on the higher side at 0.75%, but the performance is worth the price.
AAM S&P 500 High Dividend Value ETF (SPDV)
SPDV is a passively managed ETF that takes a disciplined approach to dividend investing by avoiding the trap of chasing high yields into fragile companies. It does this by tracking the S&P 500 Dividend and Free Cash Flow Yield Index, which applies two simultaneous filters to the S&P 500 universe. The first is straightforward: dividend yield, which signals that a company is both profitable and willing to return capital to shareholders.
The second is where SPDV separates itself from simpler dividend funds: free cash flow yield. A high free cash flow means the company is generating genuine cash from its operations, not just paying dividends it can’t truly afford. Together, these two screens are designed to find dividend payers that are cheap and financially healthy.
It’s very under-the-radar despite having a very solid composition and a low expense ratio of 0.29%. The ETF is up 6.3% year-to-date already and comes with a 3.54% monthly dividend yield alongside that.
Its holdings are split very evenly among market sectors at 6-10% each.