Baby Boomers Should Move to These 5 Safe Dividend ETFs Before September
September historically crushes stock portfolios, and with hedge funds building the largest Nasdaq short position ever recorded, retirees depending on a bull market for income face a shrinking window to reposition into safety.
While many Baby Boomers have enjoyed a long bull market over the past 35 years, income eventually becomes more critical than stock appreciation. The reason is simple: those who leave their careers to enjoy a well-deserved retirement lose the benefits of a regular salary and their job benefits, such as 401(k) matching and company-paid healthcare. In addition, many baby boomers use retirement to travel and enjoy the rewards they worked hard to earn. Choosing investments wisely is imperative. At 24/7 Wall St., we constantly search for the best ideas for Baby Boomers and retirees. This time, we set out to find the five best and safest dividend exchange-traded funds (ETFs).
September is historically the weakest month of the year for U.S. stocks, and this year investors face a stock market that has climbed steadily since the AI/data center trade took off in November 2022 with the introduction of OpenAI’s ChatGPT, which became the fastest-growing software application, garnering over a million users in just five days. Recently, it was reported that asset managers and hedge funds built the largest Nasdaq Futures short position in history. They didn’t build that because they think stocks are going higher.
We searched our 24/7 Wall St. dividend ETF database for the safest and best funds for Baby Boomers seeking to generate passive income. We found funds that make sense and offer the kind of security seniors crave. These dividend-focused ETFs are particularly well-suited for seniors because they address the core financial needs of retirement: generating reliable income while preserving capital. Unlike momentum growth stocks, which can be volatile and don’t provide regular passive income or cash flow, these ETFs deliver quarterly dividend payments that can supplement Social Security and pension income, helping retirees cover living expenses without selling shares during market downturns. Plus, they offer safe growth potential to keep up with inflation, something high-yield savings accounts and certificates of deposit (CDs) don’t offer.
Each of these well-run ETFs, managed by experienced professionals at top U.S. investment firms, emphasizes low volatility, strong financials, and diversification, which are all critical for capital preservation in retirement. Yields range from about 2% to 3%, substantially higher than the S&P 500’s 1.3% yield. All have low expense ratios, helping you keep more of your returns.
Schwab U.S. Dividend Equity ETF
This top-rated fund has become extremely popular among retirees, as it screens for high-quality dividend stocks with strong financials, including cash flow. Paying a solid 3.01% dividend yield with a very low expense ratio of just 0.06%, Schwab U.S. Dividend Equity ETF (NYSEArca: SCHD) checks all the boxes. The fund tracks the Dow Jones U.S. Dividend 100 Index. It is heavily concentrated in defensive sectors like energy, consumer staples, and healthcare, which tend to hold their value during market downturns.
To pursue its goal, the fund generally invests in index stocks. The index measures the performance of high-dividend-yielding U.S. companies with a record of consistently paying dividends, selected for fundamental strength relative to peers as measured by financial ratios. The fund will invest at least 90% of its net assets in these stocks.
Vanguard High Dividend Yield ETF
Known for Vanguard’s characteristically low fees, Vanguard High Dividend Yield ETF (NYSEArca: VYM) has an expense ratio of just 0.06% and stands out for its excellent diversification. This ETF provides broad exposure to dividend-paying stocks with a good sector balance, making it a stable choice for retirees seeking income. While it offers only a 2.21% dividend, its safety factor may appeal to ultra-conservative seniors seeking dependable income and a little growth to keep up with inflation.
The fund manager uses an indexing approach designed to track an index of common stocks from companies that generally pay higher-than-average dividends. The adviser seeks to replicate the target index by investing all, or substantially all, of the fund’s assets in the index’s stocks, holding each stock in approximately the same proportion as its index weighting.
ProShares S&P 500 Dividend Aristocrats ETF
This fund yields 2% and has averaged a beta of 0.77, making it a reasonably safe option. ProShares S&P 500 Dividend Aristocrats ETF (NASDAQ: NOBL) invests in stocks that have consistently increased dividends, demonstrating financial strength and reliability. The expense ratio is 0.35%. Investors seeking defensive companies that pay substantial dividends are drawn to the Dividend Aristocrats, and for good reason. The 69 companies that made the cut for the 2026 S&P 500 Dividend Aristocrats list have increased their dividends (not just maintained them) for 25 consecutive years. But the requirements go even further, with the following attributes also mandatory for membership on the Aristocrats list:
- Companies must be worth at least $3 billion for each quarterly rebalancing.
- Their average daily volume must be at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.
- They must be a member of the S&P 500.
The fund invests in financial instruments that ProShare Advisors believes, in combination, should track the index’s performance. The index measures the performance of S&P 500 companies that have consistently increased dividends for at least 25 years. Under normal circumstances, it invests at least 80% of its total assets in index components or instruments with similar economic characteristics.
iShares Core Dividend Growth ETF
iShares Core Dividend Growth ETF (NYSEArca: DGRO) suits retirees and income-seeking investors, focusing on dividend-growth stocks. These stocks typically come from financially healthy companies that have raised dividends over time, providing resilience during market downturns. With a modest 1.86% yield and a tiny 0.08% expense ratio, this is an excellent fund for ultra-conservative seniors seeking modest growth and income exceeding typical bank savings rates.
The fund generally will invest at least 80% of its assets in the component securities of its underlying index and in investments with economic characteristics substantially identical to those of its underlying index. The underlying index is a subset of the Morningstar U.S. Market Index, a broad market index that represents approximately 97% of the market capitalization of publicly traded U.S. stocks.
State Street SPDR S&P Dividend ETF
This top fund, run by one of the industry’s leading companies, invests in high-yield stocks that have consistently increased dividends for at least 20 consecutive years, providing retirees with reliability. State Street SPDR S&P Dividend ETF (NYSEArca: SDY) screens for stocks with consistent capital growth, holds more than $19 billion in net assets, and charges a competitive 0.35% expense ratio. Core holdings are concentrated in the industrials, utilities, and financial sectors. The fund currently pays a 2.37% dividend.
The fund generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index. The index is designed to measure the performance of the highest-dividend-yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends for at least 20 consecutive years.
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Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.
Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.
Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.
Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.
