Why does Warren Buffett prefer stocks over an asset like gold? The simple answer: cash flow.
With gold, you only earn capital gains when you sell it for a profit. However, you don’t need to sell your stocks to earn an income. You can hold on to your stocks while earning a steady income in the form of dividends for as long as you want.
If you are one of those prioritizing high and stable cash flows, then you need to add the right income exchange-traded funds, or ETFs, to your portfolio. Income ETFs are funds that invest in income-yielding or cash-flow-generating securities, whether they’re dividends or interest payments.
Why Should You Consider Income ETFs?
If you are a retiree or nearing retirement, income from your portfolio can help to finance your retirement budget. Even if you are not near retirement, you may use the monthly or quarterly distributions from income ETFs to meet certain recurring needs and wants (for example, paying your children’s school fees).
You may also prioritize regular income so you can reinvest it in the market and profit from the “magic” of compound interest. For stock investors, this approach is known as dividend growth investing.
Additionally, income investing can be a way to reduce the risk exposure of your portfolio, especially in bear markets. Investors often view consistent and growing dividend payments as a sign that a company is stable and able to generate profits across various economic cycles. Thus, when the stock market is volatile, investors often reallocate their equity portfolio to defensive stocks, which are known for their dividend consistency.
In what follows, we consider seven of the best income ETFs to buy in 2026. This list focuses on stock, bond and REIT ETFs. It ignores income-generating derivative strategies, which are often too complex for the average retail investor.
| ETF | Expense ratio | 30-day SEC yield |
| Schwab U.S. Dividend Equity ETF (ticker: SCHD) | 0.06% | 3.4% |
| SPDR Portfolio S&P 500 High Dividend ETF (SPYD) | 0.07% | 4.6% |
| iShares International Select Dividend ETF (IDV) | 0.50% | 3.9% |
| Vanguard Long-Term Bond ETF (BLV) | 0.03% | 5.4% |
| State Street SPDR Portfolio High Yield Bond ETF (SPHY) | 0.05% | 7.1% |
| Schwab U.S. REIT ETF (SCHH) | 0.07% | 3.5% |
| VanEck Mortgage REIT Income ETF (MORT) | 0.42% | 13.7% |
Schwab U.S. Dividend Equity ETF (SCHD)
SCHD is an equity income ETF that tracks the Dow Jones U.S. Dividend 100 Index. This index contains 100 U.S. stocks that combine high dividend yields, strong fundamentals and consistent dividend payments.
It tracks popular dividend stocks like Verizon Communications Inc. (VZ), Coca-Cola Co. (KO) and Home Depot Inc. (HD), among others.
- 30-day SEC yield: 3.4%
- Expense ratio: 0.06%
- Assets under management: $85.1 billion
- Number of holdings: 104
- Five-year annualized return (market price): 8.2%
SCHD is best known for its low expense ratio, high dividend yield and dividend consistency.
SPDR Portfolio S&P 500 High Dividend ETF (SPYD)
SPYD is an equity income ETF that tracks the S&P 500 High Dividend Index, an index of 80 S&P 500 companies with the highest dividend yield.
- 30-day SEC yield: 4.6%
- Expense ratio: 0.07%
- Assets under management: $7.1 billion
- Number of holdings: 80
- Five-year annualized return (market price): 7.9%
SPYD is best known for its high dividend yield, low expense ratio and commitment to an equal-weight strategy rather than weighting its holdings by market capitalization.
iShares International Select Dividend ETF (IDV)
IDV is an equity income ETF that tracks the Dow Jones EPAC Select Dividend Index. This index consists of high-yielding dividend stocks in developed markets outside of the U.S., including Europe, Asia and Canada.
It includes popular names like British American Tobacco PLC (BATS.L) and Total Energies SE (TTE).
- 30-day SEC yield: 3.9%
- Expense ratio: 0.5%
- Assets under management: $8.1 billion
- Number of holdings: 103
- Five-year annualized return (market price): 12.9%
IDV is best known for its high dividend yield, global diversification and strong returns.
Vanguard Long-Term Bond ETF (BLV)
BLV is a bond ETF that mirrors the Bloomberg U.S. Long Government/Credit Float Adjusted Index, a benchmark of long-duration (maturities of 10 years or more) and investment-grade U.S. government and corporate bonds.
- 30-day SEC yield: 5.4%
- Expense ratio: 0.03%
- Assets under management: $8.8 billion
- Number of holdings: 3,000
- Five-year annualized return (market price): -3.1%
BLV is best known for its high dividend yield, low expense ratio and monthly distributions.
State Street SPDR Portfolio High Yield Bond ETF (SPHY)
SPHY is a bond ETF that mirrors the ICE BofA US High Yield Index. This index tracks corporate bonds rated below investment grade (BB+ or lower).
- 30-day SEC yield: 7.1%
- Expense ratio: 0.05%
- Assets under management: $10 billion
- Number of holdings: 1,924
- Five-year annualized return (market price): 4.4%
SPHY is best known for its high dividend yield, which results from its focus on non-investment-grade bonds.
Schwab U.S. REIT ETF (SCHH)
SCHH is a REIT ETF that tracks the Dow Jones Equity All REIT Capped Index, a benchmark that consists of all publicly traded U.S. REITs (mortgage and equity).
- 30-day SEC yield: 3.5%
- Expense ratio: 0.07%
- Assets under management: $9.3 billion
- Number of holdings: 121
- Five-year annualized return (market price): 3.7%
SCHH is best known for its low expense ratio and the diversification of its holdings.
VanEck Mortgage REIT Income ETF (MORT)
MORT seeks to replicate the performance of the MVIS US Mortgage REITs Index, an index that tracks U.S. mortgage REITs.
- 30-day SEC yield: 13.7%
- Expense ratio: 0.42%
- Assets under management: $383.7 million
- Number of holdings: 27
- Five-year annualized return (market price): -1%
MORT is best known for its high yield and its concentration in mortgage REITs.
Which Income ETF Is Best for You?
If you want to earn a consistent income from your portfolio, any of these seven income ETFs may be appropriate for your situation.
However, the one(s) you choose will depend on your risk tolerance (can you cope with the higher risk of non-investment-grade bonds?), other investment goals (the importance of returns in addition to yield, for instance) and time horizon (for example, can you cope with the long maturities of a long-term bond ETF?).
In the end, you should talk to your financial advisor before making a final decision. This will help you choose the right income ETFs that align with your individual financial situation.