Key Points
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The DIVO ETF holds a variety of stable large-cap names pays out cash distributions monthly.
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Meanwhile, the SCHD ETF is de-risked with top-quality holdings and offers an enticing yield for passive income enthusiasts.
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With so many choices, the universe of dividend exchange traded funds (ETFs) can be overwhelming. The good news is that a little bit of knowledge can go a long way, and it’s definitely possible to narrow down your choices to a perfect pair of passive income ETFs.
Some criteria I look for in the best income-focused ETFs are broad diversification, high yield, recognizable names in the holdings, and an emphasis on dividend growers. These filters enabled me to pick out two top-tier ETFs for ambitious but safety-minded dividend collectors today.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
My first of two picks is an under-the-radar ETF for anyone seeking fast-growing income. It’s called the Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO).
Even before we factor in the dividend payments, the Amplify CWP Enhanced Dividend Income ETF has held up well during this volatile year so far. So, how did DIVO mitigate the volatility factor when headline risk ramped up?
For one thing, the Amplify CWP Enhanced Dividend Income ETF didn’t just pile into technology stocks or any other specific market sector. With 30 stocks in the fund’s holdings, the DIVO ETF is diversified across a variety of sectors, from energy to financials, technology to consumer goods and more.
Furthermore, the Amplify CWP Enhanced Dividend Income ETF has reduced its volatility risk by investing in established large-cap names you’ll certainly recognize. I encourage you to peruse the fund’s holdings list, where you’ll find Procter & Gamble (NYSE:PG), Chevron (NYSE:CVX), Goldman Sachs (NYSE:GS), Microsoft (NASDAQ:MSFT), and McDonald’s (NYSE:MCD), among others.
The overall approach of the Amplify CWP Enhanced Dividend Income ETF is to invest in “high-quality large-cap companies with historical dividend and earnings growth.” It’s a sensible strategy as high earners like Visa (NYSE:V), Caterpillar (NYSE:CAT), and JPMorgan Chase (NYSE:JPM) can afford to grow their dividends over time.
To sweeten the deal even more, the Amplify CWP Enhanced Dividend Income ETF features a distribution rate (i.e., a forward annual dividend yield) of 4.81%. Even better, the dividend distributions are paid out on a monthly basis so you can compound your wealth with frequent reinvestment.
Finally, the DIVO ETF has an expense ratio (i.e., the annualized management fees which are automatically deducted from the share price) of 0.56%. It’s a fair price to pay for smart stock selection, reduced volatility risk, and attractive yield for income seekers.
Schwab U.S. Dividend Equity ETF (SCHD)
Already, you’ve got a serious passive income machine with the Amplify CWP Enhanced Dividend Income ETF. Yet, you can diversify and de-risk your portfolio even further by adding shares of another fabulous dividend fund: the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD).
Like DIVO, SCHD has held up well during this rough-and-tumble year. This has been possible because the Schwab U.S. Dividend Equity ETF contains 103 stocks and tracks the Dow Jones U.S. Dividend 100 Index, so you’ll get access to top-quality names across many market sectors.
Peek inside the full list of holdings of the Schwab U.S. Dividend Equity ETF and you’ll see plenty of firms with an overall history of dividend growth. Without a doubt, you’ll recognize well-known names like Coca-Cola (NYSE:KO), Bristol-Myers Squibb (NYSE:BMY), Lockheed Martin (NYSE:LMT), Conoco Phillips (NYSE:COP), and Home Depot (NYSE:HD).
By holding DIVO and SCHD, you’ll have a broad range of superior-quality dividend growers in your passive income portfolio. Moreover, you’ll be able to sleep soundly at night because these funds combine fast-growing income opportunities with stability and diversification.
And just like the Amplify CWP Enhanced Dividend Income ETF, the Schwab U.S. Dividend Equity ETF provides consistent dividend reinvestment opportunities to fast-track your portfolio growth. Whereas DIVO pays its cash distributions every month, you’ll have to be a little more patient with SCHD as it pays out on a quarterly basis.
Diving deeper into the details, the Schwab U.S. Dividend Equity ETF features a trailing 12-month distribution yield (i.e., a dividend yield) of 4.03%. There are no guarantees that the fund will maintain this yield in 2025, but the SCHD ETF’s dividend seems reasonably safe for now.
Additionally, the Schwab U.S. Dividend Equity ETF has one of the lowest expense ratios I’ve seen in a long time. Believe it or not, SCHD’s annual expense ratio is only 0.06%, so you’ll get to keep more of your profits quarter after quarter.
As we’ve discovered today, the Amplify CWP Enhanced Dividend Income ETF and the Schwab U.S. Dividend Equity ETF have different features and advantages for dividend investors. By combining DIVO and SCHD, you can approach passive income perfection with solid holdings, strong growth, and stable yields in 2025.
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