The Smartest Dividend ETF to Buy With $1,000 Right Now -- and It's Up 19% in 2026
As I do now and then, I'm here to recommend an exchange-traded fund (ETF) for your consideration. (Remember that ETFs are funds that trade like stocks.) Specifically, one that's focused on dividend-paying stocks. There are many such ETFs to choose from, but it's hard for me to re
As I do now and then, I'm here to recommend an exchange-traded fund (ETF) for your consideration. (Remember that ETFs are funds that trade like stocks.) Specifically, one that's focused on dividend-paying stocks. There are many such ETFs to choose from, but it's hard for me to recommend any other one than the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) .
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With dividend-focused ETFs , there's generally a trade-off between dividend income and growth. The highest-yielding ETFs tend to grow more slowly, and vice versa. The Schwab U.S. Dividend Equity ETF, though, is strong on both counts.
Its dividend yield is 3.25% (as of June 3); a look at its recent performance follows. I'm including the performance of the Vanguard S&P 500 ETF (NYSEMKT: VOO) , which recently yielded merely 1.1%, too, for comparison.
You can see that the Schwab fund, up 19% year to date, delivers less growth than the S&P 500 , but not that much less, especially when compared with many other dividend-focused ETFs. Also, it kicks out almost three times the dividend income as the S&P 500.
Meanwhile, its expense ratio -- i.e., its annual fee -- is also compelling, at a mere 0.06%. That means that for every $10,000 you have invested in the fund, you'll pay only $6.
The Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index, which encompasses 100 stocks with a track record of paying dividends for at least 10 years. The index also demands that its components appear financially healthy, gauging factors such as cash flow to total debt and return on equity. That requirement can help it perform well, as companies on shakier financial ground may have to reduce or even suspend their dividend payments should they run into trouble.
Also, healthy and growing dividend-paying stocks tend to increase their payouts over time, which will benefit shareholders.
