Over the past 100 years, stocks have proved to be the best investment. Better than bonds, oil, gold or real estate. That’s because they have a remarkably consistent track record, returning over 10% annually on average.
Yet the market rarely ever returns exactly 10% in any given year and sometimes stocks can fall at an alarming and dramatic rate. Just in 2025, the Nasdaq Composite index tumbled over 10% in a matter of weeks, officially checking into correction territory.
So it’s a good idea to keep some money on the sidelines, so if a downturn occurs and you need money, you won’t have to sell your stocks at a discount or loss. But where should you put your long-term, buy-and-hold money?
Putting your money to work for you
An excellent place to put your money to work is in dividend growth stocks. History shows that companies that initiate a dividend and then grow them over time have outperformed all other classes of stocks by a fairly wide margin.
Data from Hartford Funds and Ned Davis Research shows dividend growth stocks on the S&P 500 returned 10.2% on average over the past 50 years while non-payers returned just 4.3% annually.
Dividend growth stocks offer both income and capital appreciation, giving you the best of both worlds. The research also indicates high-yielding dividend stocks tend to outperform lower yielding stocks too.
One of the best ways to get exposure to these top-performing stocks is through exchange-traded funds (ETFs). They provide investors with a broad basket of top-notch companies that offer instant diversity across size, industry, and geographic location, giving you a better balanced portfolio.
Below are two of the top high-yield, dividend-paying ETFs you can buy today.
Vanguard High Yield Dividend Index ETF (VYM)
The Vanguard High Dividend Yield ETF (NYSEARCA:VYM) stands out as a leading long-term buy-and-hold option for investors seeking income and growth. With $76 billion in assets, VYM tracks the FTSE High Dividend Yield Index, holding 529 stable, dividend-paying stocks spread across financials (22.9%), industrials (11.9%), and healthcare (11.5%), while delivering a 2.5% yield.
That’s $2,530 annually on a $100,000 stake, nearly double the S&P 500’s 1.3% yield. Moreover, its 0.06% expense ratio keeps costs razor-thin, letting dividends compound over decades. Since inception in 2006, VYM has averaged cumulative returns of 370%, blending income with steady growth.
Unlike growth-heavy ETFs, its value tilt — 19.8 P/E ratio versus the S&P 500’s 28.5x — offers a buffer in downturns. VWY’s 2022 dip of 0.37% beat the benchmark index’s 18% plunge. Risks like rate hikes or sector slumps exist, but VYM’s diversified blue-chip base Broadcom (NASDAQ:AVGO), JPMorgan Chase (NYSE:JPM), and Exxon Mobil (NYSE:XOM) are its top three holdings — ensures resilience. For a retiree or patient investor, VYM’s a cash-flow machine that grows quietly, year after year.
SPDR Portfolio S&P 500 High Dividend ETF (SPYD)
The SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA:SPYD) is the second high-yield dividend ETF for investors seeking reliable long-term income and modest growth. With $6.8 billion in assets, SPYD tracks the S&P 500 High Dividend Index, holding 80 of the highest-yielding S&P 500 stocks, equally weighted across real estate (23.6%), utilities (17.9%), and consumer staples (14.9%). Its 4.5% yield outshines the S&P 500 by almost three-to-one, delivering steady quarterly payouts.
It also sports a very low 0.07% expense ratio, or $7 per $10,000, meaning costs stay low, maximizing returns. Since its 2015 launch, SPYD’s averaged 9.4% annualized returns, balancing income with growth. Though it lagged in 2022’s tech rally, its 4.3% 2025 YTD gain signals it remains a solid choice. Risks like dividend cuts or rate shifts exist, but SPYD’s diversified, high-yield focus makes it a bedrock for income-driven portfolios.
No one stock commands a dominating spot in the portfolio, with its top three positions of CVS Health (NYSE:CVS), AT&T (NYSE:T), and Philip Morris International (NYSE:PM) all around 1.6% of the total.
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