Key Points
These three dividend ETFs can generate steady passive income at low-cost.
Each of these ETFs offer elite stocks with ultimate portfolio diversification.
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Exchange-traded funds are the ultimate way to achieve portfolio diversification in 2025. Amid the ongoing market volatility and the uncertainties surrounding tariffs, I consider ETFs a safer and more reliable option than stocks. 2025 hasn’t been kind to the stock market and several stocks have seen high fluctuations. If the stocks fail to recover in the second half of the year, it could mean trouble for investors. This is why diversification is crucial. ETFs hold a bunch of stocks, thus reducing sector-specific risks. My top choice in 2025 is dividend ETFs.
If you want to enjoy passive income without taking company-specific risks, consider investing in dividend ETFs. There are hundreds of ETFs to choose from, but I’ve picked the top three under $50 that generate steady income.
SPDR Portfolio S&P 500 High Dividend ETF
The SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA: SPYD) mirrors the performance of the S&P 500 high dividend index. It holds 77 stocks, including the best dividend payers in the industry.
Trading for $42, the fund has remained flat year-to-date but is up 6.12% in the year. It has $6.7 billion in assets and has performed better than the S&P 500. SPYD has a dividend yield of 4.7% and has generated over 7% returns in 12 months. The fund holdings include:
Real estate: 23.75%
Utilities: 18.42%
Consumer Defensive: 15.36%
Financial services: 14.48%
The top ten stocks in the fund account for 15.27% of the assets and none have a weightage of more than 2%. Some of its holdings include Kenvue Inc., Phillip Morris International Inc., AT&T and CVS Health Corporation.
Since the fund is heavily focused on the real estate sector, it can ensure steady dividend growth. If you want to move away from tech-heavy investments, SPDR is worth considering. It has a low expense ratio of 0.07% and the fund is rebalanced each quarter to ensure that it is always holding the best stocks.
Schwab U.S. Dividend Equity ETF
The Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD )invests in 103 dividend stocks and the best thing about the ETF is that it isn’t tech-heavy. SCHD tracks the Dow Jones U.S. Dividend 100 Index and only invests in companies that have a history of annual dividend increases.
If you’re tired of hearing about the Magnificent Seven, this ETF will be an ideal choice. The Net Asset Value of SCHD is $26.19 and it is down 3.9% year-to-date. It has a low expense ratio of 0.06%.
Its holdings include:
Energy: 21.08%
Consumer Staples: 19.06%
Healthcare: 15.68%
Industrials: 12.45%
The top 10 stocks make up over 40% of the total assets of the fund. Some top holdings include Coca-Cola, ConocoPhillips, Cisco, Chevron Corporation and Verizon Communications. These are Dividend Aristocrats that can sustain and grow dividends.
It offers ultimate portfolio diversification and has an expense ratio of 0.06%. The fund has a 30-day yield of 3.97%. SCHD has generated an annualized return of 10.7% in the decade and 13.7% in the past five years. It has shown steady dividend growth for 12 years.
Global X SuperDividend U.S. ETF
The Global X Super Dividend U.S. ETF (NYSEARCA: DIV) hold the top 50 highest paying companies in the U.S. and it has paid monthly dividends for 11 years. It is a high-yield ETF and holds 50 stocks with a low expense ratio of 0.05%. DIV has an NAV of $17.65 and it is down 2.5% year-to-date. The monthly dividends make the ETF an ideal choice for monthly dividend seekers. With DIV, you get to own the highest yielding stocks in the country.
Its holdings include:
Energy: 21.3%
Real estate: 18.4%
Utilities: 15.6%
Consumer Staples: 11.8%
The largest holdings in the portfolio include Ardagh Metal Packaging, Phillip Moris and Altria Group. No stock has a weightage over 4% and no sector has a weightage higher than 25%. The annualized 5-year return of the fund is 15.18% and its 30-day SEC yield is 7.85%.
In the current environment, this ETF can be a smart choice.
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