The 5 Best ETFs to Build a Rock-Solid Dividend Portfolio

If you want to build a rock-solid dividend portfolio, jump into safe exchange-traded funds (ETFs).

For one, they can help provide a steady stream of income stability. Two, ETFs allow you to diversify with dividend stocks from various sectors, which can help spread out your risk. Three, some of the strongest, dividend-paying ETFs will help keep your portfolio safe from incessant market volatility.

Plus, according to Franklin Templeton:

“While at times overlooked, dividends have played a substantial role in investor returns over the past several decades. From 1960 through the end of last year, roughly 85% of the S&P 500 Index’s cumulative total return can be attributed to reinvested dividends and the power of compounding. Dividend-focused strategies provide the potential for better stability, consistent income, and a hedge against economic uncertainty for all-weather portfolios.”

That being said, here are just a few of the best dividend-paying ETFs to watch. Most should help you build out a rock-solid dividend portfolio.

Vanguard Dividend Appreciation ETF

With an expense ratio of 0.05% and a monthly yield of 1.73%, the Vanguard Dividend Appreciation ETF (NYSEARCA: VIG) is attractive.

It tracks the performance of the S&P U.S. Dividend Growers Index and invests in large-cap stocks with a record of dividend growth. Making the ETF safer, the index it follows has a history of investing in companies that have increased dividends for 10 consecutive years.

In fact, by investing in financially strong companies – especially those committed to shareholder returns – the ETF becomes far more stable.

In addition, the Vanguard Dividend Appreciation ETF holds 338 stocks. That includes Apple, Microsoft, Broadcom, JPMorgan, Eli Lilly, Visa, Exxon Mobil, UnitedHealth Group, Mastercard, and Costco Wholesale, to name a few.

Fidelity High Dividend ETF 

We can also look at the Fidelity High Dividend ETF (NYSEARCA: FDVV).

With an expense ratio of 0.16% and a yield of 3.26%, the FDVV ETF tracks the Fidelity High Dividend Index. That index tracks the performance of stocks of large- and mid-cap dividend-paying companies that are expected to continue to grow dividends.

Making the Fidelity High Dividend ETF safe, it offers exposure to a variety of sectors. It also filters out non-dividend-paying stocks to help make its portfolio stronger. In addition, some of its top holdings include Apple, Microsoft, Nvidia, JPMorgan Chase, Visa, Exxon Mobil, Philip Morris, and Procter & Gamble.

iShares Core High Dividend ETF 

There’s also the iShares Core High Dividend ETF (NYSEARCA: HDV).

With an expense ratio of 0.08% and a yield of 3.3%, the HDV ETF tracks an index composed of high dividend-paying U.S. equities. Some of its 75 holdings include Exxon Mobil, Johnson & Johnson, Progressive Corp., Chevron, AbbVie, Philip Morris, AT&T, and Coca-Cola, to name just a few.

SPDR Portfolio S&P 500 High Dividend ETF  

With an expense ratio of 0.07% and a yield of 5%, the SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA: SPYD) tracks the S&P 500 High Dividend Index. That index is designed to measure the performance of the top 80 high-dividend stocks on the S&P 500.

At the moment, the ETF has 77 holdings. That includes CVS Health Group, Consolidated Edison, Philip Morris, AT&T, Exelon Corp., Verizon, and Altria Group, to name just a few.

JPMorgan Equity Premium Income Fund 

Another solid dividend ETF is the JPMorgan Equity Premium Income Fund (NYSEARCA: JEPI).

With an expense ratio of 0.35% and a yield of 8.2%, the ETF generates income through dividends and options premiums.

Also, as noted by ETF.com, “JEPI can be a good investment for more experienced, risk-averse investors who are looking for an ETF that can provide low-volatility, stocklike returns with superior yields.” It also helps reduce investor risk by diversifying with top blue-chip stocks.

At the moment, the JPMorgan Equity Premium Income Fund holds 129 stocks. That includes Progressive Corp., Visa, Mastercard, Southern Company, UnitedHealth, Trane Technologies, AbbVie, and Amazon, to name just a few.