Dividend exchange-traded funds (ETFs) give income-focused investors an attractive alternative to bonds or stocks, particularly during periods when the latter two are struggling.

Most dividend ETFs invest in a variety of dividend-paying stocks, and many of the most popular ETFs track blue-chip companies with solid dividends and safe payout ratios. It's a way to give investors a little less risk while offering a regular income stream, something that concerns many retirees.

Not all dividend ETFs are created equal. It's important that investors look at volatility, because too much volatility equals risk. It's also crucial to examine the expense ratio of the ETFs, because a fund with an excessively high management expense ratio (MER) can easily eat into profits. Generally, though, dividend ETFs have lower MERs than dividend-focused mutual funds because there is less turnover among the holdings in a typical ETF.

Dividend-focused ETFs also provide more safety than just buying stocks in high-dividend-paying companies, which can become yield traps. An individual stock can cut its dividend, the stock will then likely fall even further, and the investor is stuck. However, with a dividend ETF, even if one of the holdings struggles or cuts its dividend, the effect is diluted by the breadth of holdings in the EFT.

The S&P 500 index is down more than 20% so far this year, with an average dividend yield of 1.82%. These three dividend ETFs have outperformed the S&P 500 so far this year, both in share appreciation and in 12-month yield.

Keeping an eye on high dividends

The iShares Core High Dividend ETF (HDV 0.71%) pays a quarterly dividend of $1.231, offering a current yield of 3.97%. It has delivered a total return so far this year of 3.17% and has a three-year total return of 20.35%. Its MER of 0.08% is lower than most ETFs.

The fund attempts to track the Morningstar Dividend Yield Focus Index of equities that pay a relatively high dividend. The fund's 75 equities have significant economic moats that might set them apart from competitors. Its top five holdings include ExxonMobil, Chevron, AbbVie, Verizon, and Merck.

The fund weighs its stocks by total dollar amount of the dividends paid instead of yield. This means it weighs heavily toward large-cap stocks.

RDIV Total Return Price Chart.

RDIV Total Return Price data by YCharts.

Seeking a little less volatility

The TrueShares Low Volatility Equity Income ETF (DIVZ 0.48%) has a total return of 1.51% so far this year and a three-year total return of 21.56%. The fund focuses on a limited number of stocks, between 25 and 35 (it currently holds 32 equities), and they are screened for attractive valuations, high cash flow, consistent revenue streams, and, of course, dividends. The goal is to find companies with lower volatility than the rest of the market.

Its quarterly dividend went up 23% last quarter to $0.25 and offers a current yield of 3.51%. The one downside is a relatively high MER of 0.65% that comes with the fund being actively managed rather tracking an index.

The fund's top five holdings include ExxonMobil, UnitedHealth Group, First American Financial, Genuine Parts Co., and Lockheed Martin.

Looking more at the long term

The Invesco S&P Ultra Dividend Revenue ETF (RDIV 0.82%) is the top-performing ETF of these three over the past three years, with a total return of 26.31%, and so far this year, its total return is 1.84%.

The fund, which has a low MER of 0.39%, is based on the S&P 900 Dividend Revenue-Weighted Index and invests at least 90% of its assets in equities that are in the index. The fund takes the index, excludes the top 5% of the stocks by yield and the top 5% of stocks in each sector by dividend payout ratio, then picks the top 60 stocks by dividend yield, weighing them by revenue. The fund and index are rebalanced quarterly according to yields and revenue.

The fund's top five holdings include Best Buy, Phillips 66, Chevron, ExxonMobil, and Walgreens Boots Alliance.

The funds raised its dividend by 5.6% in the last quarter to $0.3696 per share, giving it a yield of about 3.37%.

Let someone else do the work

The advantage of dividend ETFs over just buying, say, Dividend Aristocrats, is ETFs have a built-in diversification that owning a handful of blue chips can't give you. Plus, these ETFs are rebalanced frequently, so you don't have to pay attention as much as if you were solely in individual equities.

The downside is, over the long haul, these ETFs are less likely to have as much growth as the S&P 500. However, in times of economic uncertainty, they are nice, conservative hedges with significantly fewer downsides, ideal for retirees.