Dividends ETFs are one of the best and easiest ways of getting passive income

What I love most about them is they require almost no effort (maybe a couple hours a years to go over your portfolio and make some adjustments) and you don’t need much money to get started.

Even though I own many rental properties and absolutely love real estate as a way of building passive income, there are many challenging to real estate

1. Needs a lot more upfront capital to get started (unless you use advanced borrowing techniques or strategies)
2. Requires a lot more time and effort to manage (unless you hire out a property management company and give up some of your profits)

According to Morningstar there are more than 130 dividend etfs out there with categories ranging from High Dividend ETFs, International Dividend Etfs, Real Estate Dividend ETFs and Dividend Aristocrat ETFs

I've broken down 6 of the best dividend etfs for passive income taking using 4 criteria:

1. Low expense ratio - which is very important for keeping the most money and maximizing returns
2. High distribution yield - meaning the company pays a higher percentage of dividend per share price
3. Good five year trailing returns to help make sure it's a solid company that has a good chance of continuing to make those dividend payouts
4. Top 20% category rank to make sure it's a good performing fund

As we identify each dividend ETF, I will explain who this dividend is best for, it's dividend safety score, payout frequency, expense ratio and other useful information

Be sure to read or watch to the end, because I'm going to share some things you may want to consider before purchasing an ETF that could be an even better option for you. In addition I’ll go over some important taxation notes to consider.

TOP 6 DIVIDEND ETF FOR PASSIVE INCOME SUMMARY:

(see below for details)

1. Vanguard Dividend Appreciation ETF (VIG)
2. iShare Core High Dividend ETF (HDV)
3. PowerShares S&P 500 High Dividend Low Volatility ETF (SPHD)
4. WisdomTree U.S Quality Dividend Growth ETF (DGRW)
5. ProShares S&P 500 Dividend Aristocrats ETF (NOBL)
6. S&P Dividend ETF (SDY)

DIVIDEND ETF #1: VANGUARD DIVIDEND APPRECIATION ETF (VIG)

LINK TO FUND
https://investor.vanguard.com/etf/profile/VIG

WHAT IT TRACKS
This fund seeks to track the performance of the NASDAQ U.S Dividend Achievers Select Index which focuses on stocks of large capitalization companies that have raised their dividends for ten or more years

OVERVIEW
Best For: Growth
Dividend Safety: A-
Payout Frequency: Quarterly
Expense Ratio: 0.06%

This fund started in 2006 and it holds around 289 stocks with it's top 10 holding accounting for about 30% of its total assets

TOP 10 PORTFOLIO HOLDINGS AND WEIGHT
1. Microsoft Corp - 3.90%
2. UnitedHealth Group Inc - 3.9%
3. Johnson & Johnson  - 3.8%
4. Procter & Gamble Co.  - 3.10%
5. JP Morgan Chase & Co. -  2.90%
6. Visa Inc. -  2.80%
7. Home Depot Inc. -  2.60%
8. Mastercard Inc.  - 2.60%
9. Coca-Cola Co. -  2.00%
10. PepsiCo Inc. -  1.90%

PERFORMANCE
Since the inception this fund has had an average annual return of 9.46% with a 10 year average return of 12.45%

Had you invested $10,000 10 years ago, your investment would be worth $32,329 today

In terms of its dividend payouts, the last per share distribution (as of the video recording) was $0.69 for every share that you owned with the share price of $152.85

4 FACTORS OF STOCKS IN FUND
The stocks selected on the index are based on four fundamentals based characteristics

1. cash flow to total debt
2. return on equity
3. dividend yield
4. 5 year dividend growth rate.

ADDITIONAL NOTES

• All companies in the index have paid dividends for at least 10 consecutive years meaning they are more reliable dividend stocks
• Though it's dividend yield may be a bit lower, it's really low fees and focus on quality makes this great for long term dividend growth investors

DIVIDEND ETF #2: iShare Core High Dividend ETF (HDV)

LINK TO FUND
https://www.ishares.com/us/products/239563/ishares-high-dividend-etf

WHAT IT TRACKS
This funds goal is to track the Morningstar dividend yield focus index, which offers exposure to high quality U.S companies that have had strong financial health and an ability to sustain above average payouts

OVERVIEW
Best For: Income
Dividend Safety: B+
Payout Frequency: Quarterly
Expense Ratio: 0.08 %

This fund started in 2011 and holds around 75 stocks with its top 10 holdings accounting for close to 60% of its total net assets.

TOP 10 HOLDINGS AND WEIGHT
Exxon Mobil Corp 8.17%
Abbvie Inc 6.45%
Johnson & Johnson 5.81%
Chevron Corp 5.65%
JPMorgan Chase & CO 5.34%
Verizon Communications Inc 4.82%
Philip Morris International 4.35%
Procter & Gamble 4.32%
Merk & Co inc 4.11%
Coca-Cola 3.59%

PERFORMANCE
Since the inception this fund has an average annual return of 10.87% wit ha 10 year average annual return of 10.32%

Had you invested $10,000 10 years ago you'd have $31,565 today

The Current Dividend Yield is 3.41% or around $0.76 per share

ADDITIONAL NOTES

• Typically when a fund has its top 10 weighted heavily in its overall portfolio that means there is potential for a lot more volatility and risk. However, what makes this fund better is that it's largest weights are in blue chip stocks such as Exxon Mobil, Johnson and Johnson and Verizon.
• Companies in the index must have a moat rating of "narrow' or "wide" and the Distance to default score in the top 50% of eligible companies. Companies in this index represent top 75 yielding stocks meeting the screening criteria

DIVIDEND ETF #3: PowerShares S&P 500 High Dividend Low Volatility ETF (SPHD)

LINK TO FUND
https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&ticker=SPHD

WHAT IT TRACKS
This fund seeks to match the performance of the S&P 500 Low Volatility High Dividend Index

OVERVIEW
Best For: Income
Dividend Safety: C+
Payout Frequency: Monthly
Expense Ratio: 0.30%

This fund was created in 2012 and consists of 50 stocks in the S&P 500 Index that have historically provided high dividend yields with lower volatility.

TOP 10 HOLDINGS AND WEIGHT
1. William Cos Inc 3.62%
2. Kinder Morgan 3.25%
3. Altria Group Inc 3.09%
4. Chevron Corp 3.05%
5. PPL Corp 2.70%
6. Philip Morris International 2.68%
7. Kraft Heinz Co 2.60%
8. International Business Machines 2.59%
9. Pinnacle West Capital Group Corp 2.46%
10. AT&T Inc 2.22%

PERFORMANCE
Since the inception of this fund it has returned an average of 11.10 % meaning had you invested $10k during the inception you would have $25,475

Dividend payout of of 3.58% or around $0.145 per share

ADDITIONAL NOTES

• The way this fund is created is by identifying 75 stocks with the highest dividend yields over the past 12 months with no sector allowed to contribute more than 10 stocks. From those 75 securities, 50 stocks with the lowest volatility over the past 12 months are included
• Conservative income investors may find comfort that around 35% of the funds assets are allocated to utilities and consumer staple which are known for steady payouts. However with substantial investments in REITs and utilities it may also be more sensitive to interest rates.

DIVIDEND ETF #4: WisdomTree U.S Quality Dividend Growth ETF (DGRW)

LINK TO FUND
https://www.wisdomtree.com/etfs/equity/dgrw

WHAT IT TRACKS
This fund seeks to track investment results of dividend- paying large-cap companies with growth characteristics in the U.S equity market.

OVERVIEW
Best For: Growth
Dividend Safety: B-
Payout Frequency: Monthly
Expense Ratio: 0.28%

Founded in 2013 it's comprised of 300 companies

TOP 10 HOLDINGS AND WEIGHT
1. Johnson $ Johnson 5.15%
2. Apple Inc 4.65%
3. Microsoft Corp 4.21%
4. Philip Morris International Inc 3.81%
5. Merk & Co 3.73%
6. Coca-Cola 3.67%
7. Procter & Gamble 3.60%
8. Altria Group 3.40%
9. PepsiCo Inc 2.62%
10. UnitedHealth Group 2.46%

PERFORMANCE
Since the inception it has an average annual return of 13.26% and had you invested $10k since the inception you would have $29,687

Dividend Yield of 1.86% or about 0.095 per share

ADDITIONAL NOTES

• It’s one of the best dividend ETFs because it screens companies based on long-term growth expectation, return on equity, and return on assets. This helps remove lower quality, slower growing dividend stocks from the fund

DIVIDEND ETF #5: ProShares S&P 500 Dividend Aristocrats ETF (NOBL)

LINK TO FUND
https://www.proshares.com/our-etfs/strategic/nobl/

WHAT IT TRACKS
This funds seeks to track the results of the S&P 500 Dividend Aristocrats Index which is considered one of the best dividend ETFs out there

OVERVIEW:
Best For: Growth
Dividend Safety Score: A-
Payout Frequency: Quarterly
Expense Ratio of 0.35%

This fund started back in 2013 and currently has just over 50 holdings which are equally weighted and reasonably diversified with it's largest sector being consumer staple at around 25% of total assets.

TOP 10 HOLDINGS AND WEIGHT
1. Nucor Corp 1.25%
2. Walmart Inc 1.34%
3. Essex Property Trust 1.35%
4. Brown & Brown Inc 1.38%
5. Stanley Black & Decker 1.39%
6. West Pharmaceuticals 1.40%
7. VF Corp 1.41%
8. Target Corp 1.43%
9. S&P Global 1.43%
10. Aflac Inc 1.45%

PERFORMANCE
Since the inception in 2013 this fund has an average annual return of 12.42% and had you invested $10k into this fun you would have $27,428

Dividend Yield is 2.20% and Dividend Payment are 0.35 per share

ADDITIONAL NOTES

• The only ETF focusing exclusively on the S&P 500 Dividend Aristocrats which are high quality companies which have been able to grow their dividend payments for 25 consecutive years with many doing so for 40 years or more.
• Since its inception the fund has outperformed the S&P500 with lower volatility and is great for investors looking to gain exposure to a number of proven dividend growth stocks.

DIVIDEND ETF #6. S&P DIVIDEND ETF (SDY)

LINK TO FUND
https://finance.yahoo.com/quote/SDY/holdings?p=SDY

WHAT IT TRACKS
This fund seeks to match the returns of the S&P High Yield Dividend Aristocrats Index.

OVERVIEW:
Best For: Income and Growth
Dividend Safety: C
Payout Frequency: Quarterly
Expense Ratio: 0.35%

This fund was created in 2005 and is comprised of companies in the S&P Composite 1500 Index that have consistently increased their dividend for at least 20 consecutive years, and weights the stocks by yield

TOP 10 HOLDINGS AND WEIGHT
1. Exxon Mobil 2.81%
2. AT&T Inc 2.5%
3. South Jersey Industries Inc 2.22%
4. Chevron Corp 2.02%
5. International Business Machines Corp 2.00%
6. AbbVie Inc 1.93%
7. National Retail Properties Inc 1.86%
8. Federal Realty Investment Trust 1.77%
9. Realty Income Corp 1.70%
10. Old Republic International Corp 1.65%

PERFORMANCE
This fund has a 10 year average annual return of 12.57% meaning that had you invested $10k 10 years ago you'd have $34,919 to date

Dividend Yield of 2.65% or around 3.36 per share

ADDITIONAL NOTES

• The S&P Dividend Aristocrats is a favorite amongst income investors. This fund simply expands the eligible companies from 500 to 1,500.
• Very few companies achieve consecutive dividend growth streaks for at least 20 straight years so this fund targets higher quality dividend paying stocks.
• This is definitely the perfect funds for those wanting exposure to relatively high yield and a track record of growing their dividends.

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