The Top High-Dividend ETFs for Passive Income in 2026

Dividend stocks are popular investments: Many investors rely on the regular dividend payments that these stocks offer as sources of passive income. Of course, investors can pursue a total-return approach to generating income to meet their spending needs, too. Or they can combine the two income strategies.

Exchange-traded funds that invest in dividend-paying stocks can be simple one-stop solutions for income seekers, for a few reasons:

• Dividend ETFs maintain a portfolio of dividend stocks and thereby provide instant diversification.
• Dividend ETFs are, in general, low-cost.
• Dividend ETFs are easy to buy and sell; many of the best dividend ETFs are managed by popular asset managers with brokerage platforms.

Those investors who’d like to get exposure to dividend stocks through an ETF have plenty of good ETFs to choose from.

How We Selected the Top High-Dividend ETFs for 2026

Choosing the best dividend ETFs for passive income isn’t just about looking for the highest-yielding ETFs. The ETFs with the biggest yields may be taking on outsize risks or they might be expensive.

When it comes to choosing the best dividend ETFs for passive income, we used the following criteria:

• We focused on dividend ETFs earning Morningstar Medalist Ratings of Gold or Silver with 100% analyst coverage. Such highly rated funds generally charge low fees and are likely to outperform over a full market cycle.
• We only included dividend ETFs with trailing 12-month yields higher than that of the S&P 500 as of Jan. 30, 2026.

13 of the Best High-Dividend ETFs for Passive Income in 2026

Thirteen ETFs made our list.

1. Capital Group Dividend Value ETF CGDV
2. Fidelity High Dividend ETF FDVV
3. JPMorgan Dividend Leaders ETF JDIV
4. Schwab International Dividend Equity ETF SCHY
5. Schwab U.S. Dividend Equity ETF SCHD
6. State Street SPDR S&P Dividend ETF SDY
7. Vanguard Dividend Appreciation ETF VIG
8. Vanguard High Dividend Yield ETF VYM
9. Vanguard International Dividend Appreciation ETF VIGI
10. Vanguard International High Dividend Yield Index ETF VYMI
11. WisdomTree U.S. LargeCap Dividend ETF DLN
12. WisdomTree U.S. MidCap Dividend ETF DON
13. WisdomTree U.S. SmallCap Dividend ETF DES

Even though the funds on our list of the top high-dividend ETFs all focus on income, they practice very different strategies—and as a result, they can behave very differently from each other. Investors seeking passive income need to do some homework to understand exactly what a particular dividend ETF invests in before buying.

How to Choose the Best Dividend ETF for Your Portfolio

Here are a few things for investors to think about as they research the funds on our list of top-rated high-dividend ETFs to buy.

Do I want my dividend ETF to invest primarily in the stocks of large US companies? Large US companies have traditionally been the bread-and-butter investments for dividend investors. But they’re not the only place to go for dividends. Midsize and small US companies pay dividends, too; in fact, three of the dividend ETFs on our list land in the mid- or small-cap Morningstar Categories. And the yields on many companies abroad are more attractive than those of their US counterparts today. Indeed, three of the best high-dividend ETFs on our list focus on international dividend payers.

Do I want my dividend ETF to be passive or active? Most high-dividend ETFs are passive investments, which means they’re tracking a particular index; there’s no manager actively picking stocks. In fact, just one of the names on our list of top high-dividend ETFs is actively managed.

Do I want a monthly dividend ETF? Although investors may own dividend ETFs to supplement their monthly income needs, most ETFs do not pay monthly dividends. Instead, most dividend ETFs—and most dividend stocks in the US, for that matter—pay quarterly dividends instead. Not surprisingly, only three funds on our list of top dividend ETFs pay monthly dividends.

Do I want a dividend-yield or a dividend-growth approach? Some dividend strategies are focused more on absolute yield, while others emphasize the growth of a dividend over time and care less about what a stock’s current yield is. Many strategies rest somewhere between the two.

Here’s a look at each of the best high-dividend ETFs, along with a commentary from the Morningstar analyst who covers the ETF.

Capital Group Dividend Value ETF

• Morningstar Medalist Rating: Gold
• Morningstar Category: Large Value
• 12-Month Yield: 1.26%
• Dividend Frequency: Quarterly
• Active or Passive: Active
• Top 3 Sectors: Technology, Industrials, Healthcare

Capital Group Dividend Value ETF is one of two actively managed funds on our list of top high-dividend ETFs; it’s also the lowest-yielding option of the group.

The fund’s requirements center on income. In aiming for a dividend yield before fees that is 30% greater than the S&P 500, the fund mostly sticks to US investment-grade companies with a long history of paying dividends.

Still, the managers do have some flexibility to invest outside those guidelines and can target stocks because of their healthy financials and growth prospects. Managers can invest up to 10% of the fund’s assets in nondividend payers that combine ongoing superior profitability with modest leverage relative to industry peers. They can also invest up to 10% of their assets in non-US companies. Typically, the managers like to stick with large multinational companies that don’t have great US alternatives.

This fund tracks the firm’s Capital Group Dividend Value composite, which goes back to 2001. The ETF is a more concentrated version of the composite, holding roughly 50 stocks, with similar stylistic traits and high overlap. The strategy tends to be more value-oriented relative to its prospectus benchmark, the S&P 500, and has typically landed near the value-blend border of the Morningstar Style Box. That said, it has bounced around being more correlated to the S&P 500 and Russell 1000 Value Index at times owing to its flexible mandate.

Stock selection drives the portfolio’s sector exposures. Relative to both indexes, the strategy has typically overweighted industrials. The fund is also typically light on financials relative to both indexes while having decent absolute allocations to healthcare and technology.

• Morningstar Medalist Rating: Silver
• Morningstar Category: Large Value
• 12-Month Yield: 2.81%
• Dividend Frequency: Quarterly
• Active or Passive: Passive
• Top 3 Sectors: Technology, Financial Services, Consumer Defensive

Fidelity High Dividend ETF’s yield lands around the middle of the pack, which aligns with a strategy that focuses on high dividend yield with a nod to dividend growth.

Fidelity High Dividend ETF rides the line between income and price appreciation to drive strong long-term performance.

The fund tracks the Fidelity High Dividend Index, a portfolio of large- and mid-cap US stocks that can hold some stocks from international developed markets. The index filters out stocks without dividends and stocks with the highest payout ratios, which could signal unsustainable dividends. Stocks are then scored based on their dividend yield, payout ratio, and dividend growth. Those with the best sector-relative scores are included in the index. This process helps filter out companies with poor financial health—a concern with high-yield dividend-paying stocks.

The index reweights each sector using the broad US market as a starting point and reallocates up to 40% from the lower-dividend-paying sectors to the higher-dividend-paying sectors. Within each sector, stocks are weighted based on their market cap with a size adjustment to mitigate any biases toward smaller stocks.

The fund diversifies well despite its narrow scope. It stowed about 31% in its top 10 holdings at the end of April 2025, or about the same as its peers. Including international stocks further improves the fund’s diversification and enhances its dividend yield.

Review Morningstar’s full report about Fidelity High Dividend ETF.

JPMorgan Dividend Leaders ETF

• Morningstar Medalist Rating: Silver
• Morningstar Category: Global Large Blend
• 12-Month Yield: 1.69%
• Dividend Frequency: Quarterly
• Active or Passive: Active
• Top 3 Sectors: Technology, Financial Services, Industrials

JPMorgan Dividend Leaders ETF is the only global dividend fund on our list of top high-dividend ETFs to buy, which means it invests in both US dividend stocks and non-US dividend stocks.

The investment philosophy centers on rigorous bottom-up stock selection, with limited emphasis on top-down style or factor positioning. J.P. Morgan’s regional analyst teams, covering more than 2,500 companies globally, form the foundation of the idea-generation process. Analysts conduct in-depth fundamental research to classify stocks within the firm’s proprietary framework as premium, quality, standard, or challenged.

Analysts assign a five-year expected return target to each company, incorporating near-term earnings, normalized earnings power, and long-term growth assumptions. These targets are ranked on relative attractiveness, which provides a clear and structured input into portfolio construction. The managers focus predominantly on premium and quality stocks but remain disciplined around valuation to avoid overpaying.

Of the 2,500 stocks, about 1,700 pay a dividend, and every portfolio must do so. From this opportunity set, the managers focus on three types of dividend-payers. Compounders are the primary focus, combining robust earnings potential with a demonstrated record of dividend growth and the ability to sustain this over time. The second group is high dividend growth, typically those with low payout ratios, offering yields below the market average but supported by strong long-term earnings prospects. The final group consists of higher-yielding stocks, which offer superior yield and a consistently high payout ratio supported by strong free cash flow generation.

Read Morningstar’s full report about JPMorgan Dividend Leaders ETF.

Schwab International Dividend Equity ETF

• Morningstar Medalist Rating: Silver
• Morningstar Category: Foreign Large Value
• 12-Month Yield: 3.36%
• Dividend Frequency: Quarterly
• Active or Passive: Passive
• Top 3 Sectors: Financial Services, Consumer Defensive, Communication Services

Schwab International Dividend Equity ETF is the first of three foreign-stock funds on our list of top high-dividend ETFs to buy—and its yield is among the highest on our list.

Schwab International Dividend Equity ETF builds a defensive, value-oriented portfolio that should offer better risk-adjusted performance than many of its peers in the foreign large-value category.

This ETF tracks the Dow Jones International Dividend 100 Index. It starts with stocks in the Dow Jones Global ex-US Large-Cap and Dow Jones Global ex-US Mid-Cap Indexes, and it whittles those cohorts down to a select portfolio of just 100 stocks. It excludes REITs and searches for stocks with higher dividend yields, greater profitability and free cash flow, lower volatility, and a long history of regular cash dividend payments. It focuses on the top names that meet these criteria while incorporating some buffer rules to keep turnover within reasonable levels. The fund also promotes diversification by limiting single-stock weightings to 4% at each rebalance, sector weightings to 15%, and emerging markets to 15%.

The resulting portfolio favors dividend-payers that are likely to maintain their dividend payments. On average, its profitability has been consistently higher than the average of its peers in the foreign large-value Morningstar Category, and it has tended to be less volatile. Despite looking for stocks with higher dividend yields, it doesn’t provide a dramatically higher yield than the category average. That said, yield does not play a big role in the portfolio’s overall ability to deliver strong risk-adjusted performance relative to the index or its category peers.

Review Morningstar’s full report about Schwab International Dividend Equity ETF.

Schwab U.S. Dividend Equity ETF

• Morningstar Medalist Rating: Gold
• Morningstar Category: Large Value
• 12-Month Yield: 3.51%
• Dividend Frequency: Quarterly
• Active or Passive: Passive
• Top 3 Sectors: Energy, Consumer Defensive, Healthcare

Schwab U.S. Dividend Equity ETF is the second of five Gold-rated funds on our list of the best high-dividend ETFs to buy.

Schwab U.S. Dividend Equity ETF stands out for its sensible, transparent, and risk-conscious approach that should generate better long-term risk-adjusted returns than the Russell 1000 Value Index, its Morningstar Category benchmark.

The Dow Jones US Dividend 100 Index, which underpins this fund, admits 100 stocks that have paid dividends for at least 10 consecutive years and boast the financial health to extend that streak. Companies like Pepsi and Verizon meet those requirements and have sat in the portfolio since 2017. Dividend-oriented firms with healthy balance sheets tend to be more insulated from market movements than highfliers or low-quality competitors, so this fund normally strikes a defensive stance.

Strict stock-selection criteria give this fund potent exposure to the quality factor, which has historically been tied to market-beating returns. The fund comfortably and consistently beats the Russell 1000 Value Index in profitability metrics like return on invested capital. Entering March 2024, nearly 65% of the portfolio represented stocks with wide Morningstar Economic Moat Ratings, a higher share than more than 90% of category peers. Quality can be pricey, but focusing on the higher-yielding half of the market and tilting toward mature franchises lands the fund on the cheaper side of the large-value category.

The fund weights holdings by market cap, an efficient approach that channels the market’s collective view on each stock’s relative value. It also muffles the impact of riskier, higher-yielding holdings because stock weightings rise and fall alongside valuations. The fund limits each stock’s weighting to 4% of the portfolio and each sector’s weighting to 25%. Concentration can bubble up in lean portfolios like this one, so these measures help the fund stay diversified.

Index buffers effectively mitigate trading and the associated costs. The index may retain current constituents over more deserving candidates, but the lower trading costs make this a worthy trade-off. A rock-bottom fee makes the fund a very cheap all-around offering.

Read Morningstar’s full report about Schwab U.S. Dividend Equity ETF.

State Street SPDR S&P Dividend ETF

• Morningstar Medalist Rating: Silver
• Morningstar Category: Mid-Cap Value
• 12-Month Yield: 2.45%
• Dividend Frequency: Quarterly
• Active or Passive: Passive
• Top 3 Sectors: Industrials, Consumer Defensive, Utilities

State Street SPDR S&P Dividend ETF is one of the only two mid-cap funds among our best high-dividend ETFs for passive income.

State Street SPDR S&P Dividend ETF’s demanding dividend requirement breeds a high-quality portfolio of disciplined companies. It sacrifices some upside for stability but should continue to reward long-term investors willing to accept the trade-off.

This index strategy admits only stocks that have increased their dividend for 20 straight years, a strict requirement that confers more pros than cons. The firms that meet it aren’t flashy but generate reliable profits. Focusing on these high-quality companies helps the fund weather bear markets better than most, though it normally lags during rallies.

The pedigree of this portfolio makes its yield-weighting approach a good fit. Weighting stocks based on dividend yield is risky because it can emphasize stocks with declining prices. But these firms’ track records mean that their dips are often opportunities to buy low—not the start of a permanent slide. Yield weighting pulls the fund into the mid-value Morningstar Category despite selecting stocks from the broad-based S&P 1500 Index.

This strategy is not perfect. Requiring 20 years of dividend growth turns away worthy candidates that fall just short. The index also ignores forecast metrics that can identify firms at risk to cut their dividends. Forward-looking screens may have jettisoned 3M before its reduced dividend forced the fund to sell in May 2024. The winners have outnumbered the losers over the fund’s nearly 20 years on the market, though.

Read Morningstar’s full report about State Street SPDR S&P Dividend ETF.

Vanguard Dividend Appreciation ETF

• Morningstar Medalist Rating: Gold
• Morningstar Category: Large Blend
• 12-Month Yield: 1.59%
• Dividend Frequency: Quarterly
• Active or Passive: Passive
• Top 3 Sectors: Technology, Financial Services, Healthcare

Vanguard Dividend Appreciation ETF is the only name on our list of top high-dividend ETFs that lands in the large-blend category, which is in line with its focus on dividend growth.

Vanguard Dividend Appreciation pulls in stable, profitable firms that have increased their dividend payments for over a decade. This simple, repeatable approach and low costs form a long-term edge over peers.

This strategy tracks the S&P US Dividend Growers Index, which targets US stocks that have increased their dividend payments for at least 10 consecutive years. It eliminates the highest-yielding names from that cohort to ensure its holdings are financially stable and more likely to continue making dividend payments. The index weights its holdings by their free-float-adjusted market cap, which leverages the market’s collective wisdom and mitigates turnover and the associated trading costs. It also limits individual stocks to 4% of the portfolio at each annual rebalance to promote diversification.

Targeting stocks with 10 years of dividend growth is a strict hurdle that provides a big advantage. It indirectly targets profitable companies that not only have the capacity to increase their dividend payments but also a willingness to do so. Combining yield and quality results in a balanced stable of more than 300 companies. However, if a company were to miss a single dividend payment, it would have to wait 10 years before it is welcomed back.

The strategy’s strict requirements tend to weed out recent highflyers. These omissions can cause diverging performance relative to large-blend peers in the short term, but this strategy should result in smoother and more consistent performance over the long run. Likewise, excluding the highest-yielding eligible stocks reduces the portfolio’s exposure to value traps without giving up the fund’s yield advantage over the broad market.

A portfolio of high-quality, stable companies should be tough to beat on a risk-adjusted basis over the long haul. This strategy’s low expense ratios further carve out a durable edge.

Read Morningstar’s full report about Vanguard Dividend Appreciation ETF.

Vanguard High Dividend Yield ETF

• Morningstar Medalist Rating: Gold
• Morningstar Category: Large Value
• 12-Month Yield: 2.33%
• Dividend Frequency: Quarterly
• Active or Passive: Passive
• Top 3 Sectors: Financial Services, Technology, Healthcare

The second of four Vanguard funds among our group of the best high-dividend ETFs, Vanguard High Dividend Yield ETF differs from its predecessor on our list by emphasizing dividend yield over dividend growth.

Vanguard High Dividend Yield strikes a nice balance between higher-yielding stocks and distressed yield traps. Its ability to manage risk should provide an advantage over most of its Morningstar Category peers.

This fund tracks the FTSE High Dividend Yield Index. It starts with large- and mid-cap stocks in the FTSE USA Index, excluding REITs, and ranks them by their expected dividend yield over the next 12 months. The index selects those representing the higher-yielding half of eligible dividend-paying stocks. Selected holdings are weighted by float-adjusted market cap, pulling the portfolio toward larger, more stable stocks.

Focusing on dividend yield gives the portfolio a value orientation that can open the portfolio to risk. Yield traps, or stocks with untenably high dividends, pose a significant risk to dividend funds. But this strategy limits its exposure to risky companies. Sweeping half the dividend-paying universe into its portfolio diversifies stock-specific risks and limits the influence of distressed firms. Market-cap weighting also emphasizes larger, more stable firms that should have the capacity to continue making dividend payments. This mitigates the impact of yield traps because their weight drops as their prices fall.

Leaning toward stable companies comes at the cost of maximizing dividend yield. But the fund’s yield still typically surpasses the Russell 1000 Value Index by about 1 percentage point. Stability extended to performance as well, with the fund historically experiencing a standard deviation consistently lower than its category bogy.

Like other dividend funds, this portfolio’s sector composition can deviate substantially from the category index, owing to its yield orientation.

Read Morningstar’s full report about Vanguard High Dividend Yield ETF.

Vanguard International Dividend Appreciation ETF

• Morningstar Medalist Rating: Gold
• Morningstar Category: Foreign Large Growth
• 12-Month Yield: 2.12%
• Dividend Frequency: Quarterly
• Active or Passive: Passive
• Top 3 Sectors: Financial Services, Industrials, Healthcare

Vanguard International Dividend Appreciation is among the lower-yielding ETFs on our list of top high-dividend ETFs, which is unsurprising given its emphasis on dividend growth.

Vanguard International Dividend Appreciation holds profitable firms with consistent dividend growth that should offer attractive long-term performance. Its focus is on stable firms that insulate the portfolio from volatility and should lead to a long-term risk-adjusted advantage.

This fund tracks the S&P Global Ex-U.S. Dividend Growers Index, which targets large- and mid-cap stocks from developed and emerging markets that have increased their dividend payments for at least seven consecutive years. It eliminates the highest-yielding names from that cohort to avoid distressed stocks. That should ensure its holdings are financially stable and more likely to continue making dividend payments. The index weights its holdings by free-float-adjusted market cap to help mitigate turnover and trading costs. It also limits individual stocks to 4% of the portfolio at the annual rebalance to improve diversification.

Targeting stocks with seven years of dividend growth is a strict hurdle that provides a big advantage. It indirectly targets profitable companies that not only have the capacity to make dividend payments but also a willingness to do so. However, the strategy doesn’t consider other metrics, such as debt levels and analyst earnings growth estimates, which may be indicative of a firm’s capacity to continue making payments. Additionally, if a company were to miss a single dividend payment, it must wait seven years before it is welcomed back.

Overseas companies that have a history of increasing their dividend payments are likely becoming more profitable as well. These stable businesses should be less volatile than the broader market and hold up better during downturns.

Read Morningstar’s full report about Vanguard International Dividend Appreciation ETF.

Vanguard International High Dividend Yield Index ETF

• Morningstar Medalist Rating: Silver
• Morningstar Category: Foreign Large Value
• 12-Month Yield: 3.49%
• Dividend Frequency: Quarterly
• Active or Passive: Passive
• Top 3 Sectors: Financial Services, Industrials, Energy

The highest-yielding dividend ETF on our list, Vanguard International High Dividend Yield Index ETF has more than 40% of its assets tucked away in the financial-services sector.

Vanguard International High Dividend Yield strikes a nice balance between higher-yielding stocks and distressed yield traps. Its ability to manage risk should provide an advantage over most of its Morningstar Category peers.

This fund tracks the FTSE All-World ex-US High Dividend Yield Index. It starts with large- and mid-cap stocks in the FTSE All-World ex-US Index, excluding REITs, and ranks them by their expected dividend yield over the next 12 months. The index selects those representing the higher-yielding half of eligible dividend-paying stocks. Focusing on dividend yield gives the portfolio a value orientation and can be a source of risk. High yields can stem from stocks with poor prospects and declining prices. Some of these firms may also pay out a high percentage of their earnings as dividends, reducing the portion that can be reinvested to grow their businesses.

Yield traps, or stocks with unsustainably high dividends, pose a significant risk to dividend funds. But this strategy effectively limits its exposure to risky companies. Sweeping half the dividend-paying universe into its portfolio diversifies stock-specific risks, which limits the influence of distressed firms. Weighting constituents by market cap also emphasizes larger, more stable firms that should have the capacity to continue making dividend payments. Market-cap weighting further reduces the impact of yield traps by reducing their weight as their prices fall.

Leaning toward large, profitable firms has aided the fund’s performance. It has tended to carve out an edge against its MSCI ACWI ex-USA Value Index category benchmark with lower volatility than its average category peer. The fund’s low fee of 0.17% is among the cheapest in its category, providing a durable advantage.

Read Morningstar’s full report about Vanguard International High Dividend Yield Index ETF.

WisdomTree U.S. LargeCap Dividend ETF

• Morningstar Medalist Rating: Silver
• Morningstar Category: Large Value
• 12-Month Yield: 1.83%
• Dividend Frequency: Monthly
• Active or Passive: Passive
• Top 3 Sectors: Financial Services, Technology, Healthcare

WisdomTree U.S. LargeCap Dividend ETF is the first of the three monthly dividend ETFs on our list.

WisdomTree U.S. LargeCap Dividend ETF is a great contrarian fund that charges a low fee, diversifies well, and incorporates quality and momentum factors into its process to mitigate key risks.

The WisdomTree U.S. LargeCap Dividend Index, which this fund fully replicates, follows a shrewd blueprint. It absorbs 300 of the market’s largest dividend payers and weights them by their expected dividends for the following year. Weighting by total expected dividends rather than dividend yield favors larger companies over the highest-yielding ones. Stocks with the best quality and momentum traits then earn extra weight, rewarding healthy companies and limiting exposure to those with potential flaws. The portfolio consequently generates stronger profitability ratios than the Russell 1000 Value Index, the large-value Morningstar Category benchmark. Good marks in metrics like return on assets signal that the fund taps into the quality factor, which has historically been tied to market-beating returns.

When this fund restores stocks’ dividend weights at each annual rebalance, it effectively doubles down on stocks whose prices sank relative to their dividends and peers and trims exposure to the best performers. This contrarian approach pushes the fund into value territory despite its scores of blend and growth holdings. While the fund may favor some unworthy companies and prematurely cut back on some winners, this buy-low-sell-high tack has paid off over time.

Surveying the entire US large-cap market keeps the fund diversified. Sector- and holding-level constraints prevent concentration at those levels, too.

Cost is an advantage. The fund’s annual turnover ratio ranked in the large-value category’s best quartile for 10 straight years, requiring low trading costs that erode returns. Its annual expense ratio ranks in the category’s cheapest quintile. That gives it a lower hurdle than most to beat the category index.

Read Morningstar’s full report about WisdomTree U.S. LargeCap Dividend ETF.

WisdomTree U.S. MidCap Dividend ETF

• Morningstar Medalist Rating: Silver
• Morningstar Category: Mid-Cap Value
• 12-Month Yield: 2.43%
• Dividend Frequency: Monthly
• Active or Passive: Passive
• Top 3 Sectors: Financial Services, Industrials, Consumer Cyclical

The second monthly dividend ETF on our list from WisdomTree uses a similar approach in the mid-cap market, currently offering a better dividend yield and a different sector mix than its large-cap sibling.

WisdomTree U.S. MidCap Dividend ETF is a great contrarian fund that charges a low fee, diversifies well, and incorporates quality and momentum factors into its process to mitigate key risks.

The WisdomTree U.S. MidCap Dividend Index, which this fund fully replicates, follows a shrewd blueprint. It absorbs about 350 mid-cap dividend companies and weights them by their expected dividends for the following year. Weighting by total expected dividends rather than dividend yield favors larger companies. Stocks with the best quality and momentum traits then earn extra weight, rewarding healthy companies and limiting exposure to those with potential flaws. The portfolio consequently generates stronger profitability ratios than the Russell Midcap Value Index, the mid-cap value Morningstar Category benchmark. Good marks in metrics like return on assets signal that the fund taps into the quality factor, which has historically been tied to market-beating returns.

When this fund restores stocks’ dividend weights at each annual rebalance, it effectively doubles down on stocks whose prices sank relative to their dividends and peers and trims exposure to the best performers. This contrarian approach pushes the fund into value territory despite its broad scope. While the fund may favor some unworthy companies and prematurely cut back on some winners, this buy-low/sell-high tactic has paid off over time.

Emphasizing unloved stocks makes this a deeper-value portfolio than the Russell Midcap Value Index. It can fall behind when the value factor slumps, like in 2019 and 2020. Introducing quality and momentum into weighting has benefited the fund during these environments, though: It beat over half of its mid-cap value peers in 2021, 2023, and 2024—years that favored growth stocks over value.

Surveying the entire US mid-cap market helps the fund stay diversified. Sector- and holding-level constraints prevent concentration at those levels, too. The top 10 holdings tend to represent about 10% of assets, and constraints cap each sector weight at 25%.

Read Morningstar’s full report about WisdomTree U.S. MidCap Dividend ETF.

WisdomTree U.S. SmallCap Dividend ETF

• Morningstar Medalist Rating: Silver
• Morningstar Category: Small Value
• 12-Month Yield: 2.65%
• Dividend Frequency: Monthly
• Active or Passive: Passive
• Top 3 Sectors: Financial Services, Consumer Cyclical, Industrials

WisdomTree U.S. SmallCap Dividend ETF is the highest-yielding monthly dividend ETF on our list; it’s also the only highly rated ETF in the group focused on smaller-company stocks.

WisdomTree U.S. SmallCap Dividend ETF is a great contrarian fund that charges a low fee, diversifies well, and incorporates quality and momentum factors into its process to mitigate key risks.

The WisdomTree U.S. SmallCap Dividend Index, which this fund fully replicates, follows a shrewd blueprint. It absorbs roughly 600 small-cap dividend companies and weights them by their expected dividends for the following year. Weighting by total expected dividends rather than dividend yield favors larger companies. Stocks with the best quality and momentum traits then earn extra weight, rewarding healthy companies and limiting exposure to those with potential flaws. The portfolio consequently generates stronger profitability ratios than the Russell 2000 Value Index, the small-cap value Morningstar Category benchmark. Good marks in metrics like return-on-assets signal that the fund taps into the quality factor, which has historically been tied to market-beating returns.

When this fund restores stocks’ dividend weights at each annual rebalance, it effectively doubles down on stocks whose prices sank relative to their dividends and peers and trims exposure to the best performers. This contrarian approach pushes the fund into value territory despite its broad scope. While the fund may favor some unworthy companies and prematurely cut back on some winners, this buy-low/sell-high tactic has paid off over time.

Emphasizing unloved stocks makes this a deeper-value portfolio than the Russell 2000 Value. It can fall behind when the value factor slumps, like when it finished in the small-value category’s bottom quartile in 2019 and 2020. Introducing quality and momentum into weighting benefited the fund during these environments, though: It beat over half of small-value funds in the growth-friendly 2023 and 2024 calendar years.

Surveying the entire US small-cap market helps the fund stay diversified. Sector- and holding-level constraints prevent concentration at those levels, too. The top 10 holdings represented 10% of assets entering April 2025, and no sector exceeded financials’ 25% weight.

Read Morningstar’s full report about WisdomTree U.S. SmallCap Dividend ETF.

The Right Dividend ETF for You

The best dividend-paying ETF for an investor is, of course, dependent on personal preferences. Here are a few ways to slice and dice our list of top high-dividend ETFs for passive income based on some common investor preferences.

Good ETFs for monthly income: Wisdom Tree US Large Cap Dividend ETF, Wisdom Tree MidCap Dividend ETF, Wisdom Tree SmallCap Dividend ETF

Best dividend ETFs with the highest yields: Vanguard International High Dividend Yield ETF (focused on non-US stocks) and Schwab US Dividend Equity ETF (focused on US stocks)

Top dividend ETF combining US and non-US stocks: JPMorgan Dividend ETF

Best ETF for blending value and growth characteristics: Vanguard Dividend Appreciation ETF

High-Dividend ETFs and Taxes

Because they invest primarily in stocks that are paying dividends, high-dividend ETFs aren’t very tax-efficient: Most investors will pay taxes on the income they receive from these ETFs, depending on their income tax bracket. The dividends paid by ETFs that own international stocks may also be subject to foreign withholding tax.

How to Find More of the Best Dividend ETFs to Buy

Investors who like to find more dividend ETFs to invest in can do the following:

• If dividend yield isn’t the be-all and end-all to you, expand your search beyond ETFs that yield more than the market. For instance, T. Rowe Price Dividend Growth ETF TDVG earns a Morningstar Medalist Rating of Gold, but its trailing yield is less than the market’s yield today.
• Consider reviewing dividend ETFs and dividend mutual funds from our list of The Best Dividend Funds.
• Morningstar Investor members can use our Screener tool to build a customized list of dividend ETFs. Set Investment Type to ETF and type in Div as your Keyword. The screener will generate a comprehensive list of dividend ETFs that you can research further or refine further and save as a watchlist.