Top 8 Index Funds for Dividends in 2025

It's also important to remember that dividend yield alone does not act as a perfect indicator of future performance.

Focusing only on companies paying dividends leaves out many that derive their growth from price appreciation, such as those in big tech.

Make sure you construct a diversified portfolio that covers a wide population of underlying firms with different capital strategies.

What are dividend index funds? Let's take each word in reverse order.

First, they're funds -- either mutual funds or exchange-traded funds (ETFs). Second, they attempt to track an index comprising multiple stocks. Third, they focus on stocks that pay dividends.

1. Invesco S&P 500 High Dividend Low Volatility ETF

This ETF tracks the S&P 500 Low Volatility High Dividend Index. It isolates the highest-yielding stocks in the index and then selects the 50 with the lowest volatility. One thing to note with the Invesco S&P 500 High Dividend Low Volatility ETF is that it pays monthly dividends.

2. iShares Core High Dividend ETF

This ETF is benchmarked to the Morningstar Dividend Yield Focus Index. It holds 75 U.S. high-yielding dividend stocks with overweights in the energy, consumer staples, and healthcare sectors.

3. ProShares S&P 500 Dividend Aristocrats ETF

This ETF tracks the performance of Dividend Aristocrats® -- S&P 500 members that have increased their dividends for at least 25 consecutive years. (The term Dividend Aristocrats® is a registered trademark of Standard & Poor's Financial Services LLC.) The focus here is not on high yields but rather on companies that have consistently increased their dividends. The index is equal-weighted.

4. Schwab U.S. Dividend Equity ETF

This ETF seeks to track the total return of the Dow Jones U.S. Dividend 100 index. This index uses a composite score that screens for a minimum of 10 years of dividend payments, along with a composite metric that assesses free cash flow to total debt, return on equity, dividend yield, and a five-year dividend growth rate.

5. Vanguard High Dividend Yield ETF

This Vanguard ETF tracks the performance of the FTSE High Dividend Yield Index, which selects a market cap-weighted portfolio including 55% of the highest-yielding stocks on a forward-looking basis from a broader universe of U.S. equities. However, it excludes real estate investment trusts (REITs).

6. Vanguard Dividend Appreciation ETF

The opposite of the Vanguard High Dividend Yield ETF, this Vanguard ETF tracks the S&P U.S. Dividend Growers Index. It screens potential holdings for at least 10 consecutive years of dividend growth in addition to omitting the top 25% of the highest-yielding stocks to ensure quality, along with the usual exclusion of REITs.

7. iShares Core Dividend Growth ETF

This ETF also targets dividend growth stocks via the Morningstar US Dividend Growth Index. By doing so, the iShares Core Dividend Growth ETF requires five consecutive years of dividend growth and a positive consensus earnings forecast and payout ratio of less than 75%. It also omits the top 10% of the highest-yielding stocks and REITs.

8. WisdomTree U.S. Quality Dividend Growth Fund

This dividend ETF tracks the proprietary WisdomTree U.S. Quality Dividend Growth Index, which screens holdings based on three-year historical averages for return on equity (ROE) and return on assets (ROA), long-term earnings growth expectations, and weights the portfolio by dividend payout.

Finally, longer holding periods also make your portfolio more tax-efficient. If you keep your dividend index funds for longer than a designated holding period, you'll be eligible for qualified dividends, which are taxed at a lower capital gains rate when earned.

If you do choose to allocate a portion of your portfolio to dividend index funds, know that short-term price movements are entirely normal. A long-term focus has historically been a preferable strategy.

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