Many investors rely on payments offered by dividend stocks as sources of passive income, Morningstar investment specialist Susan Dziubinski wrote in a blog post this week.
Exchange-traded funds that invest in dividend-paying stocks are attractive, Dziubinski said, because they maintain a portfolio that provides instant diversification, their cost is generally low and they are easy to buy and sell — many of the best dividend ETFs are managed by popular assets managers with brokerage platforms.
Investors who want exposure to dividend stocks through an ETF have a good selection of highly rated ones to choose from, she said, and listed a baker’s dozen that earn Morningstar medalist ratings of gold or silver with 100% analyst coverage and offered trailing yields higher than the market as of July 17.
Dziubinski said Morningstar expects these highly rated dividend ETFs to outperform over a full market cycle. She noted, however, that although the funds on the list all focus on income, they practice different strategies and can behave very differently from one other.
This means that investors seeking passive income need to do some homework to understand exactly what a particular dividend ETF invests in before they buy it.
See the gallery for the 13 best high-dividend ETFs for 2025. Year-to-date performance is as of July 22.
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