3 Dividend Growth ETFs That Offer Good Yields And Long-Term Gains

"Dividend growth stocks have a simple premise. Get low yields now that grow rapidly and generate high income by the time you retire. In exchange for taking low yields now, you typically get higher long-term capital gains than you would with a mature dividend income stock. Luckily, you don't have to pick dividend growth stocks to get exposure to this strategy. These three dividend growth ETFs make it easy."

"The Schwab U.S. Dividend Equity ETF ( NYSEARCA:SCHD) has a 3.92% 30-day SEC yield and a 0.06% expense ratio. The high yield is enough to fulfill the 4% withdrawal rule without selling a single share, and the returns are also decent for a high-yield ETF. The fund has delivered an annualized 9.1% return over the past five years. SCHD places a strong emphasis on large-cap stocks, with more than 60% of its total assets going toward those positions."

"The Vanguard High Dividend Yield Index Fund ETF ( NYSEARCA:VYM) also favors large-cap stocks but spreads its capital across mature dividend stocks and high-growth opportunities. Broadcom ( NASDAQ:AVGO) is the fund's largest position, making up more than 8% of the fund's total assets. Broadcom's high placement on the list indicates that VYM has a strong focus on dividend growth stocks. It has 566 total holdings, and its top 10 stocks make up 28% of its total assets."

Dividend growth investing targets low current yields that grow rapidly to produce substantial retirement income and long-term capital appreciation. The Schwab U.S. Dividend Equity ETF (SCHD) offers a 3.92% 30-day SEC yield, a 0.06% expense ratio, an annualized 9.1% five-year return, a large-cap emphasis (>60% of assets), roughly 100 holdings, and top-10 concentration of 42% with Amgen, Cisco, and AbbVie among its largest positions. The Vanguard High Dividend Yield Index Fund ETF (VYM) combines mature dividend stocks and growth names, holds 566 securities, allocates over 8% to Broadcom, has a 0.06% expense ratio, a 2.47% SEC yield, and long-term double-digit returns.

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