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Investors who are looking to ditch the 9-to-5 grind and live off dividends have a number of options to consider in the investing space. There are equities, bonds (and other fixed income securities), real estate, and a number of other assets to choose from.
That said, for investors looking at the exchange traded fund (ETF) world, I have three powerhouse to consider that can generate that $70,000 annual paycheck with a modest $2 million portfolio at their juicy yields.
Here’s hoe investors can look to replace a $70,000 salary on dividend from these ETFs (with a $2 million portfolio balance, mind you, but we’re not talking about small numbers here).
Schwab U.S. Dividend Equity ETF (SCHD)
The Schwab U.S. Dividend Equity ETF (SCHD) is a top ETF tracking the Dow Jones U.S. Dividend 100 Index I think is worth considering. By this logic, this ETF has hand-picked essentially the top 100 U.S. companies with a proven track record of consistent dividend payments. That’s great to know, in its own right.
However, I think this ETF’s emphasis on key fundamental factors such as return on equity (weighted at more than 25%), cash flow to debt, and dividend growth make it a top consideration for most investors. And with top holdings mostly in defensive, blue-chip industries, there’s a lot to like for investors who are looking for sleep-at-night diversification. With an ultra-low expense ratio of 0.06% and more than $70 billion in assets under management, this is a top dividend ETF to consider.
With a dividend yield of 3.3% and tax-efficient returns (a 10-year annualized return of more than 13% is nothing to sneeze at), this is an ETF with one of the lowest tax cost ratios in the sector, and one that crushes peers during downturns. In today’s volatile world, that’s definitely worth something
Vanguard High Dividend Yield ETF (VYM)
The Vanguard High Dividend Yield ETF (VYM) is an ETF delivering broad, battle-tested exposure to many of the best dividend machines the U.S. has to offer. That’s what makes this fund ideal for those seeking steady income that outpaces inflation without chasing risky yields.
VYM mirrors the FTSE High Dividend Yield Index, capturing the top half of large- and mid-cap U.S. dividend payers (excluding REITs). Additionally, this ETF is market-cap weighted for added stability across its more than 500 core holdings. I think the range of blue-chip stocks covered in this fund, and the diversification across various sectors, makes VYM a candidate for most investors of different risk profiles and time horiozns. That said, I think the tremendous underlying statistics, which include an expense ratio of 0.04%, more than $72 billion in assets under management, and a 2.3% dividend yield really separate VYM from the pack.
With a greater than 19% annualized return in 2025, investors have already seen the performance VYM can provide on the capital appreciation front. Thus, there’s a solid total return profile to consider here. Given that the average payout ratio for its portfolio companies is less than 50%, there’s plenty of room for dividend growth. For salary-replacement seekers, that’s a big deal. So, for those looking to let their dividends compound, and earn even higher yields over time, this is a top ETF I think is worth considering today.
Fidelity High Dividend ETF (FDVV)
Lastly, we come to the Fidelity High Dividend ETF (FDVV). This ETF blends hefty yields with growth potential from blue-chips, making it the smart pick for investors wanting income plus upside in a Trump-fueled economic rebound.
FDVV follows the Fidelity High Dividend Index, targeting large- and mid-cap U.S. firms with strong dividend traits, overweighting high-yield sectors across 121 holdings. While exact tops vary, it favors names like those in tech, financials, and energy for balanced punch. I think it’s important to also focus on the fundamentals of this particular ETF, which are impressive. The reality is that FDVV does have a higher expense ratio than the other two names on this list, at 0.15%. That said, this ETF also carries a 2.8% dividend yield (well more than double that of most index ETFs) and has a moderate risk profile. What that means, is investors gain low-beta exposure to the market – so, if there are drops, FDVV will in theory drop less than the overall market.
That’s good news for those concerned around budding uncertainty in the markets. This is a top ETF for those seeking high yield and liquidity, as well as diversification for a long-term passive income portfolio.