To compile this list, we began with a pool of high dividend-paying U.S. and international equity ETFs. We eliminated funds that invest in bonds, real estate investment trusts and certain other high-yielding asset classes.
Next, we banished ETFs with expense ratios higher than 0.67%. In general, lower fees boost returns. We also screened out funds whose dividend yields are below 2.67%.
Finally, we screened out newer funds that have been launched within three years. These steps pared our list to about 500 funds.
Our next step was to discard ETFs with Morningstar star rating below three. The research firm’s star ratings measure a fund’s risk-adjusted return, relative to open-end funds in the same category.
To make this list most attractive to the widest swath of investors, we barred niche sector funds and selected only broadly diversified U.S. and international high dividend equity funds. Fourteen funds made it through that screen.
The seven best equity dividend ETFs include a diverse list of fund families and strategies. One of our seven ETFs is actively managed. Many dividend funds hew towards value, but we also include funds with growth and momentum characteristics as well. You can be confident choosing any dividend ETFs from our list to round out a diversified investment portfolio.