Most financial advisors will tell retirees to put most of their savings in bonds, which offer fixed income without the volatility -- so long as they aren't sold before maturity. That might seem wise as interest rates climb, but retirees can still consider buying a few high-yielding ETFs (exchange-traded funds) for better price appreciation or higher yields.

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Image source: Getty Images.

Within this category, I prefer well-diversified ETFs that have a good track record of beating the S&P 500, or covered call ETFs that might lag the market but offer much higher yields. Let's take a look at three ETFs that fit those criteria: the Vanguard High Dividend Yield ETF (NYSEMKT:VYM), the iShares Core High Dividend ETF (NYSEMKT:HDV), and the SPDR S&P Dividend ETF (NYSEMKT:SDY).

Vanguard High Dividend Yield ETF

The Vanguard High Dividend Yield ETF is a passively managed basket of the 419 highest-yielding stocks in the U.S. (excluding REITs and master limited partnerships), and it weights them according to their market caps. Its top 10 holdings -- which account for 31% of its portfolio -- include Microsoft, ExxonMobil, Johnson & Johnson, General Electric, and JPMorgan Chase.

The ETF currently pays a 2.9% dividend, which is 38% higher than the S&P 500's average yield of 2.1%, and over the past decade it has roughly matched the performance of the S&P 500 (though it has lagged slightly over the past five years).

Past performance doesn't guarantee future returns, but this well-diversified ETF represents a simple way to remain invested in the top dividend stocks at all times. Its low expense ratio of 0.09% also makes it much cheaper than actively managed ETFs. However, the ETF is currently trading above its NAV (net asset value) at the time of this writing, which means a slight correction could be coming.

iShares Core High Dividend ETF

Investors looking for a higher-than-average yield should check out the iShares Core High Dividend ETF, which pays a 3.4% yield. The ETF consists of a smaller basket of 75 high-yielding U.S. dividend stocks (which also excludes REITs and MLPs), and its top holdings include ExxonMobil, AT&T, Chevron, Verizon, and Johnson & Johnson.

Its exposure to oil, which accounts for 20% of its holdings, is slightly worrisome due to volatile oil prices and ExxonMobil and Chevron's current payout ratios of over 100%. However, oil prices could stabilize next year on production cuts and rising demand. This passively managed ETF has a low expense ratio of 0.08%, making it a lower-cost and higher-yielding play than Vanguard's High Dividend Yield ETF. However, the iShares ETF has slightly underperformed Vanguard's over the past five-year and 10-year periods, and currently trades slightly above its NAV.

SPDR S&P Dividend ETF

Investors looking for long-term dividend growth might favor the SPDR S&P Dividend ETF, which owns a basket of 108 Dividend Aristocrats (including REITs) -- that is, companies that have raised their payouts annually for at least 25 straight years. The fund's top holdings include AT&T, People's United Financial, HCP, Chevron, and Nucor. Its portfolio is heavily weighted toward the industrial and financial sectors, which each account for about 16% of its holdings.

The fund is actively managed and weights stocks according to their yield instead of their market caps. This means that the fund will own more shares of a stock that yields 5% than one that yields 2%. The fund's expense ratio of 0.35% is much higher than that of the other two ETFs, and its 2.3% yield is only marginally better than the S&P 500's average yield -- but it crushed the S&P 500 with a 20% gain this year. As of this writing, the ETF trades at a slight premium to its NAV.

Should you buy these ETFs?

Dividend-generating ETFs can help retirees quickly diversify their portfolios across various sectors and generate a steady stream of income. However, some dividend ETFs that chase yield neglect crucial factors like free cash flows, payout ratios, and dividend hike histories.

Therefore retirees might find that dividend stalwarts like AT&T or Johnson & Johnson can generate comparable income without the complexities of expense ratios and net asset values. For affordable stocks in that category, check out my other article on solid income stocks with P/E ratios under 15.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Leo Sun owns shares of AT and T and Johnson and Johnson. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool owns shares of ExxonMobil, General Electric, and Microsoft and has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool recommends Chevron, Johnson and Johnson, Nucor, and Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.