Are there dividend-paying index funds?

Yes, there are several dividend-paying index funds for investors who prioritize steady income over high growth. They come in both mutual fund and ETF form.

Do Vanguard index funds pay dividends?

A number of well-regarded Vanguard index funds pay dividends, including the Vanguard High Dividend Yield ETF and the Vanguard Dividend Appreciation ETF.

Are dividend index funds risky?

The level of risk associated with a dividend index fund depends on its holdings. Most fund providers also include a simple visual risk scale based on historical volatility, which can give you a quick sense of how much the fund’s price has fluctuated in the past.

Which dividend fund is best?

The best dividend funds depend on your risk tolerance. A great all-around candidate is the Schwab U.S. Dividend Equity ETF, which features a low 0.06% expense ratio, a decent tax-efficient yield, and stringent index criteria.

Does an S&P 500 index fund pay dividends?

Yes, most S&P 500 index funds will pay dividends, but they will not be as high as those from pure play dividend index funds.

Do ETF index funds pay dividends?

Most index funds structured as ETFs will pay dividends, although the amount and frequency can vary greatly.

Do I pay taxes on dividends?

Yes. Dividend payments are typically taxable in the year they’re received, unless held in a tax-sheltered account like a Roth IRA. In a taxable account, dividends are classified as either qualified or nonqualified. Qualified dividends (generally from U.S. corporations) are taxed at a lower rate, while nonqualified dividends, such as those from certain REITs or foreign companies, are taxed at your regular income rate.

What is the best monthly dividend income ETF?

Not many dividend ETFs pay monthly, but the Invesco S&P 500 High Dividend Low Volatility ETF is a solid option. It focuses on high-yield, lower-volatility U.S. stocks, offering steady income and reduced market swings. For investors who prioritize total return and long-term compounding, the WisdomTree U.S. Quality Dividend Growth Fund is another strong pick.

Best Dividend Index Funds to Buy in 2026

Consider dividend index funds that pay a solid dividend and offer a high probability of price appreciation.

By Tony Dong – Updated Apr 10, 2026 at 3:23 PM EST | Fact-checked by Frank Bass

Key Points

Dividend yields can be measured in different ways, and understanding the difference between SEC, trailing, and forward yields helps set realistic income expectations.
Even diversified dividend ETFs carry risks, including dividend cuts, market sensitivity, and potential tax drag in taxable accounts.
Always review fund holdings and risk metrics, including provider volatility scales, to understand what you actually own before investing.

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A graphic listing three key considerations when looking for dividend index funds: dividend yield, expense ratio, and risk level. — Image source: The Motley Fool.

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Data source: Yahoo! Finance, Morningstar, Various fund providers. Data current as of April 2026
Fund	Dividend Yield	Expense Ratio	Risk Level

Invesco S&P 500 High Dividend Low Volatility ETF (NYSEMKT:SPHD)	4.65%	0.30%	Below average
iShares Core High Dividend ETF (NYSEMKT:HDV)	2.93%	0.08%	Average
ProShares S&P 500 Dividend Aristocrats ETF (NYSEMKT:NOBL)	2.05%	0.35%	Average
Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD)	3.38%	0.06%	Average
Vanguard High Dividend Yield ETF (NYSEMKT:VYM)	2.41%	0.04%	Average
Vanguard Dividend Appreciation ETF (NYSEMKT:VIG)	1.66%	0.04%	Average
iShares Core Dividend Growth ETF (NYSEMKT:DGRO)	2.01%	0.08%	Average
WisdomTree U.S. Quality Dividend Growth Fund (NASDAQ:DGRW)	1.29%	0.28%	Average

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NYSEMKT: SPHD

Invesco Exchange-Traded Fund Trust II - Invesco S&P 500 High Dividend Low Volatility ETF

Today's Change

(-0.80%) $-0.40

Current Price

$49.34

Key Data Points

Day's Range

$49.27 - $49.73

52wk Range

$46.38 - $53.07

Volume

657K

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The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD -0.80%) 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. Each sector is limited to a max of 25% spread across no more than 10 stocks, with individual stocks capped at 3%. One thing to note with this ETF is that it pays monthly dividends.

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2. iShares Core High Dividend ETF

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NYSEMKT: HDV

iShares Trust - iShares Core High Dividend ETF

Today's Change

(-0.67%) $-0.90

Current Price

$134.02

Key Data Points

Day's Range

$133.72 - $135.10

52wk Range

$113.27 - $140.89

Volume

329K

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The iShares Core High Dividend ETF (HDV -0.67%) is benchmarked to the Morningstar Dividend Yield Focus Index. It holds about 75 U.S. high-yielding dividend stocks screened for financial soundness, with overweights in the energy, consumer staples, and healthcare sectors.

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Exchange-Traded Fund (ETF)

An exchange-traded fund, or ETF, allows investors to buy many stocks or bonds at once.

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3. ProShares S&P 500 Dividend Aristocrats ETF

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NYSEMKT: NOBL

ProShares S&P 500 Dividend Aristocrats ETF

Today's Change

(-0.81%) $-0.88

Current Price

$107.96

Key Data Points

Day's Range

$107.80 - $108.81

52wk Range

$96.38 - $115.31

Volume

417K

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The ProShares S&P 500 Dividend Aristocrats® ETF (NOBL -0.81%) tracks the performance of Dividend Aristocrats® -- S&P 500 members that have increased their dividends annually for at least 25 consecutive years. (The term Dividend Aristocrats® is a registered trademark of Standard & Poor's Financial Services LLC.) The index is equal-weighted.

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4. Schwab U.S. Dividend Equity ETF

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NYSEMKT: SCHD

Schwab U.S. Dividend Equity ETF

Today's Change

(-0.70%) $-0.22

Current Price

$31.20

Key Data Points

Day's Range

$31.14 - $31.55

52wk Range

$25.41 - $31.95

Volume

19M

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The Schwab U.S. Dividend Equity ETF (SCHD -0.70%) seeks to track the total return of the Dow Jones U.S. Dividend 100 index. This benchmark uses a composite score that screens for at least 10 years of dividend payments, along with a composite metric that assesses free cash flow to total debt, return on equity, dividend yield, and five-year dividend growth rate.

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NYSEMKT: VYM

Vanguard High Dividend Yield ETF

Today's Change

(-0.56%) $-0.88

Current Price

$154.95

Key Data Points

Day's Range

$154.56 - $156.00

52wk Range

$121.91 - $157.29

Volume

881K

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The Vanguard High Dividend Yield ETF (VYM -0.56%) 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) to maintain tax-efficiency.

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6. Vanguard Dividend Appreciation ETF

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NYSEMKT: VIG

Vanguard Dividend Appreciation ETF

Today's Change

(-0.42%) $-0.96

Current Price

$226.83

Key Data Points

Day's Range

$226.25 - $228.00

52wk Range

$186.78 - $230.53

Volume

857K

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The opposite of the Vanguard High Dividend Yield ETF, the Vanguard Dividend Appreciation ETF (VIG -0.40%) tracks the S&P U.S. Dividend Growers Index. It screens potential holdings for at least 10 consecutive years of dividend growth, excludes the top 25% of the highest-yielding stocks to ensure quality, and omits REITs. Holdings are market cap-weighted with a 4% limit.

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7. iShares Core Dividend Growth ETF

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NYSEMKT: DGRO

iShares Trust - iShares Core Dividend Growth ETF

Today's Change

(-0.51%) $-0.37

Current Price

$72.78

Key Data Points

Day's Range

$72.63 - $73.20

52wk Range

$58.93 - $74.28

Volume

1.6M

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The iShares Core Dividend Growth ETF (DGRO -0.51%) also targets dividend growth stocks through the Morningstar US Dividend Growth Index. By doing so, the iShares Core Dividend Growth ETF requires five consecutive years of dividend growth, a positive consensus earnings forecast, and a payout ratio of less than 75%. It also omits the top 10% of the highest-yielding stocks and REITs to avoid yield traps and preserve tax efficiency.

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8. WisdomTree U.S. Quality Dividend Growth Fund

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NASDAQ: DGRW

WisdomTree U.S. Quality Dividend Growth Fund

Today's Change

(0.22%) $0.21

Current Price

$94.00

Key Data Points

Day's Range

$93.55 - $94.07

52wk Range

$76.03 - $94.26

Volume

699K

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The WisdomTree U.S. Quality Dividend Growth Fund (DGRW +0.22%) tracks the proprietary WisdomTree U.S. Quality Dividend Growth Index. This is a fundamental benchmark that 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.

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Dividend index funds FAQ

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Tony Dong has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ProShares S&P 500 Dividend Aristocrats ETF, Vanguard Dividend Appreciation ETF, and Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.

Best Dividend Index Funds to Buy in 2026

Consider dividend index funds that pay a solid dividend and offer a high probability of price appreciation.

Key Points

Key Data Points

2. iShares Core High Dividend ETF

Key Data Points

3. ProShares S&P 500 Dividend Aristocrats ETF

Key Data Points

4. Schwab U.S. Dividend Equity ETF

Key Data Points

Key Data Points

6. Vanguard Dividend Appreciation ETF

Key Data Points

7. iShares Core Dividend Growth ETF

Key Data Points

8. WisdomTree U.S. Quality Dividend Growth Fund

Key Data Points

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Key Data Points

Dividend index funds FAQ

Are there dividend-paying index funds?

Do Vanguard index funds pay dividends?

Are dividend index funds risky?

Which dividend fund is best?

Does an S&P 500 index fund pay dividends?

Do ETF index funds pay dividends?

Do I pay taxes on dividends?

What is the best monthly dividend income ETF?

Top dividend index funds to consider

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

2. iShares Core High Dividend ETF

3. ProShares S&P 500 Dividend Aristocrats ETF

4. Schwab U.S. Dividend Equity ETF

5. Vanguard High Dividend Yield ETF

6. Vanguard Dividend Appreciation ETF

7. iShares Core Dividend Growth ETF

8. WisdomTree U.S. Quality Dividend Growth Fund

What to look for in index funds that pay dividends

Why invest in dividend index funds?

Tips for investing in dividend index funds

Dividend index funds are long-term investments

Related investing topics

FAQ

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