There are many reasons investors love dividend stocks and exchange-traded funds, or ETFs: regular income, less volatility, tax advantages, long-term returns and inflation hedging, among others.
For many, regular income is a top consideration. These include those who reinvest the income to achieve a higher return on investment and those who use it to meet some needs or wants.
If you are seeking to maximize the income you receive from dividend investing, then dividend yield — the annual dividends paid by an asset divided by its market price — must be a factor when selecting an ETF to invest in.
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Also, if multiple ETFs are equally attractive (same risk-return profile, for example), dividend yield can be used as a tiebreaker when selecting an ETF.
Finally, dividend yield can be used as a measure of a company’s stability (especially with regard to earnings) and its ability to serve as a hedge during market downturns and uncertainty. Identifying investments with higher dividend yields can be a good way to protect your portfolio.
So, which dividend ETF has the highest dividend yield?
I will answer this question by considering the ETFs with the highest dividend yield overall and the ones with the highest dividend yield across some important categories. (Note: All dividend yields below are indicated annual dividend yields — what the annual dividend yield is expected to be based on the recent quarterly or monthly dividend payment.) Let’s dive in:
The ETF With the Highest Dividend Yield
The first clarifying point to make is that the term “dividend yield” applies broadly to all assets that pay income. ETFs that invest in real estate investment trusts (REITs), bonds, and derivatives (whether that of stocks or cryptocurrencies like Bitcoin and Ethereum) and pay income to investors all have dividend yields.
In essence, though only stocks pay dividends in the strict sense, the term “dividend yield” applies to all assets that pay income.
At the time of writing in mid-April, YieldMax MSTR Option Income Strategy ETF (ticker: MSTY) is the highest-dividend-paying ETF, with an annual dividend yield of 243.7%.
MSTY is an actively managed ETF that sells call options on Strategy Inc. (MSTR), an American technology company (formerly MicroStrategy) that is the largest corporate holder of Bitcoin and just boosted its BTC holding to 538,200 on April 21.
In essence, the fund generates income by betting that the stock’s price will fall. When this happens, call option buyers will decline to exercise their right to buy the stock at the strike price and forfeit the premium they paid to call sellers (or writers) like MSTY.
Dividend ETF With the Highest Dividend Yield
We can also exclude ETFs that generate income from REITs, options, futures and fixed-income securities and concentrate only on those ETFs that invest primarily in dividend-paying equities (which is what I believe you are looking for).
In this case, the USA Global Sea to Sky Cargo ETF (SEA) has the highest dividend yield (19.3%) at the time of writing.
The ETF invests in companies that build vessels and those that transport goods around the world’s oceans. It also tracks the stocks of companies that operate and lease chemical ships, tankers and containers.
ETFs With the Highest Dividend Yields Across Market Caps
If you are like most dividend investors, dividend yield cannot be the sole factor you consider. Thus, knowing the ETF that pays the highest dividend is not enough for you.
In the next sections, we will consider how you can combine factors like risk-return profile and dividend growth (and consistency) with dividend yield.
Let’s start by considering the risk-return profile in the form of market capitalization.
Your overall strategy may require that you focus specifically on large-cap (for greater stability and lower risk), small-cap (for above-average return), or mid-cap (for a combination of stability and growth) stocks.
In that case, you should be searching for dividend ETFs that pay the highest dividend within those three categories.
Large-Cap ETF With the Highest Dividend Yield
NEOS Nasdaq 100 High Income ETF (QQQI) is the large-cap ETF with the highest dividend yield (14.5%) at the time of writing.
QQQI is an actively managed fund that invests in stocks that are part of the Nasdaq-100 index. It also complements this strategy by purchasing and writing call options of Nasdaq-100 stocks.
Mid-Cap ETF With the Highest Dividend Yield
ProShares UltraShort MidCap400 (MZZ) has the highest annual dividend yield (5.2%) among mid-cap dividend ETFs at the time of writing.
MZZ is an inverse ETF that provides -2x the daily performance of the S&P MidCap 400 index. That is, it moves two times in the opposite direction of the index and is designed to profit when the index declines.
Small-Cap ETF With the Highest Dividend Yield
NEOS Russell 2000 High Income ETF (IWMI) has the highest dividend yield (16.7%) among small-cap dividend ETFs, at the time of writing.
IWMI is an actively managed ETF that invests in stocks that constitute the Russell 2000 index. It also sells and buys call options on them.
International Dividend ETF With the Highest Dividend Yield
International dividend ETFs are dividend ETFs available in the U.S. that invest in dividend stocks outside of the country (emerging markets, developed markets or a combination of both).
If you are looking to diversify your portfolio so that you are not overly exposed to economic issues that affect only the U.S. (especially given the current situation with tariffs), international dividend ETFs can be appropriate. You can also purchase them if you are seeking higher returns than what is available in the U.S.
Even with international dividend ETFs, you can still maximize your income by purchasing the one with the highest dividend yield.
iShares Emerging Markets Dividend ETF (DVYE) is the international dividend ETF with the highest dividend yield (11.4%) at the time of writing. This ETF invests in 100 of the highest-yielding stock ETFs in emerging markets. Most of its holdings (51%) are in Asia.
Among international ETFs with a global reach — they include both developed (ex-U.S.) and emerging markets — FlexShares International Quality Dividend Dynamic Index Fund (IQDY) is the ETF with the highest dividend yield (7%) at the time of writing.
Sector-Specific ETF With the Highest Dividend Yield
Concerns about risk-return profile can also make you prefer stocks in a particular sector or industry. You may select a sector because of its high returns (technology) or its low volatility and risk during economic downturns (consumer staples).
Some dividend ETFs only invest in stocks within sectors for both risk and return reasons.
Among these, Invesco KBW High Dividend Yield Financial ETF (KBWD) has the highest dividend yield (12.7%) at the time of writing. As the name implies, this ETF only selects stocks within the financial sector.
Dividend Growth ETF With the Highest Dividend Yield
Dividend growth ETFs are dividend ETFs that invest in stocks that consistently grow their dividends. Dividend Aristocrats, Kings and Achievers are subsets of the dividend growth ETFs universe.
Dividend Aristocrats are S&P 500 companies that have consistently increased their dividend payout over the past 25 years. Dividend Kings are companies of all market caps that have regularly increased dividend payout for the past 50 years. Finally, Dividend Achievers are companies that have raised dividend payouts every year for the past 10 years.
If you want both high and consistently growing dividends, you can concentrate on the dividend growth ETF with the highest dividend yield.
FT Vest S&P 500 Dividend Aristocrats Target Income ETF (KNG) is the dividend growth ETF with the highest dividend yield (8.2%) at the time of writing.
Dividend Consistency and Sustainability Growth ETF With the Highest Dividend Yield
While the idea of dividend growth dominates the dividend investing space, some investors are only concerned with dividend consistency and sustainability. That is, instead of asking if the company has grown its dividend payout ratio, they want to know if it has been paying consistently (irrespective of the payout ratio) and if it can keep doing that.
Morningstar’s Dividend Leaders Index tracks 100 stocks with the highest dividend yield from a list of stocks that pay consistent dividends and can sustain such payments (the Morningstar Dividend Composite Index).
First Trust Morningstar Dividend Leaders Index Fund (FDL) is the only ETF that tracks this index, and its dividend yield of 4% (at the time of writing) is higher than that of many dividend growth ETFs.
High-Dividend-Yield ETFs With the Highest Dividend Yield
High-dividend-yield ETFs are ETFs that only include equities with above-average dividend yields.
Some high-dividend-yield ETFs invest in stocks that make up the Dividend Dogs index, which tracks large-cap stocks with above-average dividend yields.
Since these ETFs already select stocks with above-average dividend yield, choosing the one with the highest dividend yield among them is like choosing the best of the best (though your appetite for risk is a big factor, as usual).
The aforementioned KBWD is the high-dividend-yield ETF with the highest dividend yield (12.7%) at the time of writing.
Dividend Yield Will Continue to Be Important to Investors
For some investors, dividend yield will always be the most important factor. For others, it will be one among many important factors. As we have seen, even if there are other important factors, you can still look for the ETF with the highest yield among those you have screened based on those other factors.
So, don’t worry if we haven’t covered a factor that is important to you (expense ratio, for example). Just screen the list of available ETFs based on that factor and then look for the one with the highest dividend yield among them.
Finally, note that dividend yield figures can change significantly if the ETF’s market price falls or rises significantly. Therefore, you may need to check the most recent figures to be sure that an ETF you’re considering still has the highest dividend yield.
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What ETF Has the Highest Dividend Yield? originally appeared on usnews.com
Update 04/21/25: This story was previously published at an earlier date and has been updated with new information.