Dividend exchange-traded funds (ETFs) have become a popular choice for investors seeking steady income and long-term growth potential. These funds invest in a diversified portfolio of dividend-paying stocks, providing exposure to a broad range of companies and sectors that regularly distribute a portion of their earnings to shareholders. In this article, we will first explain what a dividend ETF is and discuss the various categories that exist. We will then present a ranking of the best performing dividend ETFs from 2010 to 2020, based on total dividends paid, ETF value increase, and dividend growth. We will also explain the concept of each ETF and why they are ranked the way they are.

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Best Performing Dividend ETFs from 2010 to 2020:

1. Vanguard Dividend Appreciation ETF (VIG)

  - Total Dividends Paid (2010-2020): $12.02

  - ETF Value Increase (2010-2020): 189.3%

  - Dividend Growth (2010-2020): 53.4%

Concept: VIG seeks to track the performance of the Nasdaq US Dividend Achievers Select Index, which consists of U.S. stocks with a record of increasing dividends for at least ten consecutive years. The ETF focuses on dividend growth rather than high yield, offering exposure to companies with solid financials and a history of consistent dividend increases.

Ranking Explanation: VIG is ranked first due to its impressive ETF value increase of 189.3% and a strong dividend growth rate of 53.4% over the decade. Its focus on dividend growth and the stability of the companies in its portfolio contributed to its solid performance during the period.

2. iShares Select Dividend ETF (DVY)

  - Total Dividends Paid (2010-2020): $20.32

  - ETF Value Increase (2010-2020): 133.6%

  - Dividend Growth (2010-2020): 47.6%

Concept: DVY aims to replicate the performance of the Dow Jones U.S. Select Dividend Index, which consists of 100 high-dividend-yielding U.S. stocks. The ETF focuses on companies with a strong dividend-paying history, providing investors with a balance of income and capital appreciation potential.

Ranking Explanation: DVY ranks second due to its higher total dividends paid compared to VIG, at $20.32, and a respectable ETF value increase of 133.6%. Its emphasis on high-dividend-yielding stocks contributed to a higher income stream for investors, while still providing a solid capital appreciation.

3. Schwab U.S. Dividend Equity ETF (SCHD)

  - Total Dividends Paid (2011-2020)*: $9.22

  - ETF Value Increase (2011-2020)*: 141.5%

  - Dividend Growth (2011-2020)*: 72.7%

  *Please note that SCHD was launched in October 2011.

Concept: SCHD tracks the performance of the Dow Jones U.S. Dividend 100 Index, a benchmark that includes 100 high dividend yielding U.S. stocks with a consistent dividend payment history. The ETF offers exposure to companies with strong fundamentals and a commitment to paying dividends, focusing on both income generation and capital appreciation.

Ranking Explanation: Despite being launched in October 2011, SCHD ranks third due to its impressive dividend growth rate of 72.7% over the nine-year period and a strong ETF value increase of 141.5%. Its combination of high dividend yield and dividend growth contributed to its solid performance during this time frame. Its slightly shorter performance history and lower total dividends paid compared to the other two ETFs are the main factors for its third-place ranking.

4. SPDR S&P Dividend ETF (SDY)

  - Total Dividends Paid (2010-2020): $16.75

  - ETF Value Increase (2010-2020): 127.4%

  - Dividend Growth (2010-2020): 41.2%

Concept: SDY seeks to replicate the performance of the S&P High Yield Dividend Aristocrats Index, which is composed of the 50 highest dividend yielding constituents of the S&P Composite 1500 Index that have increased dividends every year for at least 20 consecutive years. The ETF focuses on companies with a long-standing commitment to paying dividends, offering stability and consistent income generation.

Ranking Explanation: SDY ranks fourth due to its strong total dividends paid of $16.75 and a decent ETF value increase of 127.4% over the decade. Its emphasis on long-standing dividend payers with a history of consistently increasing dividends contributes to its performance and stability.

5. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)

  - Total Dividends Paid (2012-2020)*: $9.36

  - ETF Value Increase (2012-2020)*: 94.8%

  - Dividend Growth (2012-2020)*: 39.6%

  *Please note that SPHD was launched in October 2012.

Concept: SPHD aims to track the performance of the S&P 500 Low Volatility High Dividend Index, which consists of 50 stocks from the S&P 500 Index with the highest dividend yield and the lowest realized volatility over the past 12 months. The ETF focuses on providing a balance of high income and lower risk, making it an attractive option for investors seeking both income and capital preservation.

Ranking Explanation: Despite being launched in October 2012, SPHD ranks fifth due to its focus on high income generation and low volatility. Its total dividends paid amount to $9.36, and it experienced an ETF value increase of 94.8% over the eight-year period. Its lower ranking is primarily due to its shorter performance history and lower ETF value increase compared to the other ETFs on the list.

Dividend ETFs offer a convenient and efficient way to invest in a diversified portfolio of dividend-paying stocks, providing investors with both income and potential capital appreciation. By understanding the different categories of dividend ETFs, the concept behind each top-performing fund, and the reasons for their rankings, you can make informed decisions about which dividend ETFs may be best suited for your investment goals and risk tolerance. It is important to note that past performance is not indicative of future results, and these rankings are for informational purposes only. As always, it is essential to consult with a financial advisor or other qualified professional before making any investment decisions.