THE High Dividend ETFs These options allow you to invest in hundreds of companies while receiving regular passive income. But which one should you choose? VYM, DGRO And VHYL In this article, The Top 3 High Dividend ETFs, I compare these three ETFs based on their historical performance, dividends, fees, diversification, and taxation to help you better understand their differences.
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⚠️ This article is not investment advice. Investing can lead to financial loss. The information shared is based on my personal experience and research. However, further research is recommended to confirm the information in this article.
Introduction
High dividend ETFs appeal to many investors who want to obtain regular passive income while remaining exposed to the stock markets.
However, not all dividend ETFs follow the same strategy. Some primarily select companies that already pay high dividends. Others favor companies capable of increasing their dividends over time.
In this article, I compare three ETFs that I find particularly interesting for those with a high dividend strategy:
- VYM* : a US ETF focused on US companies that pay high dividends
- VHYL* : a global ETF composed of high-dividend global companies
- DGRO* : an American ETF that selects companies with a history of dividend growth.
My goal is not to designate one ETF as the best in every situation. Rather, I want to compare their historical performance, diversification, dividends, fees, and characteristics to better understand their differences.
What is a high dividend ETF?
A high dividend ETF is a publicly traded fund that groups together many shares of companies that generally pay large dividends.
Instead of individually buying dozens or hundreds of shares, the investor can obtain diversified exposure through a single ETF.
However, there are different strategies:
- an ETF high dividend yield primarily selects companies that currently pay high dividends.
- an ETF of dividend growth favours companies whose dividends tend to increase regularly.
In reality:
- VYM and VHYL are high-dividend ETFs
- DGRO is primarily pursuing a dividend growth strategy.
Why invest in a high-dividend ETF?
In this blog, I've often written that I prefer growth ETFs to dividend ETFs. However, high-dividend ETFs also have their advantages. For example:
Diversify your portfolio
The three ETFs studied hold several hundred, or even several thousand, companies.
VHYL stands out for its international exposure, while VYM and DGRO are primarily invested in the United States.
If you own, for example, an S&P 500 ETF or a Nasdaq 100 ETF, buying a high-dividend ETF (like the DGRO) brings complementary sector diversification and a regular passive income stream every 3 months, while reducing overall portfolio volatility.
Indeed, a high dividend ETF offers exposure to certain mature sectors and invests in companies that provide regular passive income to the investor through the high dividend.
To receive regular income
The three ETFs generally pay high dividends every quarter (every 3 months).
The investor can use these distributions as supplementary income or reinvest them to gradually increase the number of shares held.
Investing with very little management
Once the investment is made, the ETF generally requires little monitoring.
The investor must still monitor their allocation, manage dividends, and file their tax return. ETFs are therefore very passive investments, but they are not entirely management-free.
The three ETFs to compare
There are many high-dividend ETFs, here are my 3 favorites.
VYM: Vanguard High Dividend Yield ETF
VYM invests primarily in large American companies that pay high dividends.
Its main advantages are:
- an exposure to several hundred American companies
- historically very low management fees
- a dividend yield generally higher than that of an ETF tracking the entire US market.
Its main limitation is its geographical exposure: it is concentrated on the United States.
VHYL: Vanguard FTSE All-World High Dividend Yield UCITS ETF
VHYL invests in high-dividend companies spread across several regions of the world.
Its main advantages are:
- strong geographical diversification
- a significant number of owned companies
- a historically higher dividend yield than that of VYM and DGRO.
In return, its fees are higher and its historical performance has been lower than that of the two ETFs studied.
DGRO: iShares Core Dividend Growth ETF
DGRO invests primarily in US companies with a history of dividend growth.
Unlike VYM and VHYL, its objective is not solely to seek the highest dividends. It also favors companies capable of increasing their dividend payouts over time.
Its main advantages are:
- an exposure to several hundred American companies
- historically attractive capital growth potential
However, its dividend yield is generally lower than that of VHYL and VYM.
| VYM | DGRO | VHYL | |
| Number of shares (Approximate) | 600 | 390 | 2,400 |
| US stock market or global stock market | US | US | Global |
| ETF objective | Investing in American companies that pay high dividends | Investing in American companies that regularly increase their dividends | Investing in global companies that pay high dividends |
ETF Comparison
Which one has historically achieved the best return?
To compare performance, I used the annualized ten-year returns published by the fund managers, over a period from approximately May 2015 to May 2025.
| AND F | Historical annualized return over 10 years |
|---|---|
| DGRO | Approximately 11.5 % |
| VYM | Approximately 9.7 % |
| VHYL | Approximately 6.7 % |
These results represent past performance. They do not allow us to predict future returns.
As an example, a hypothetical investment of USD 10,000, with reinvestment of distributions, would have yielded approximately:
| AND F | Hypothetical value after 10 years |
|---|---|
| DGRO | USD 29,700 |
| VYM | USD 25,900 |
| VHYL | USD 19,100 |
During this period, DGRO achieved its best performance ever.
However, this conclusion depends on the period studied. A different period might produce a different ranking.
👉 Best historical performance: DGRO
Which one is the most diverse?
Diversification can be assessed according to several criteria: the number of companies, geographical distribution and exposure to different sectors.
| AND F | Main Exhibition | Approximate number of shares |
|---|---|---|
| DGRO | UNITED STATES | Approximately 400 |
| VYM | UNITED STATES | Approximately 585 |
| VHYL | Whole world | More than 2,400 |
VHYL owns the largest number of companies and offers the greatest geographical diversification.
👉 Better diversification: VHYL
Which one is the safest?
It is difficult to designate one ETF as "the safest".
VYM and VHYL are managed by Vanguard, while DGRO is managed by iShares. Both companies are major and well-established players in asset management.
However, the risk depends primarily on the shares held and market developments.
Therefore, a high-dividend ETF is not a risk-free investment.
👉 Safest ETF: No obvious winner
Which one is the most passive?
All three ETFs are passive and very easy for the investor to manage.
The fund manager automatically applies the fund's strategy and adjusts its composition as needed. Therefore, the investor does not need to select the companies themselves.
👉 Most passive investment: a tie
Which one is the easiest to invest in?
In theory, All three ETFs are easy to buy or sell from a brokerage account.. There is no ETF that is easier or harder to invest in.
Easiest ETF to buy: a tie
Which one requires the least management time?
All three ETFs generally require very little time.
A simple strategy could be to invest regularly, check your allocation once or twice a year and reinvest dividends if necessary.
👉 Management time: equality
Which one is the least volatile?
All three ETFs are invested in equities and can experience significant fluctuations.
Their volatility is not identical because their compositions and geographical exposures differ. VHYL is global, while VYM and DGRO are primarily American.
During some difficult periods, all three ETFs experienced significant declines. It would therefore be misleading to consider a high-dividend ETF as a low-volatility investment.
👉 Least volatile ETF: no significant enough difference to designate a winner
Which one offers the highest dividends?
Based on the data used in this comparison, the annual dividend yields were approximately:
| AND F | Approximate dividend yield |
|---|---|
| VHYL | Approximately 3.8 % |
| VYM | Approximately 2.8 % |
| DGRO | Approximately 2.4 % |
Based on this criterion, VHYL has historically offered the highest dividend yield.
However, a high dividend yield does not guarantee a better total return. A company can pay more dividends while experiencing lower growth.
👉 Best dividend yield: VHYL
Which one distributes dividends most often?
The three ETFs generally pay quarterly distributions, or about four times a year.
👉 Frequency of distributions: equality
Which one achieved the best return excluding dividends?
By roughly separating dividends from total performance, the historical results used in this article yield the following ranking:
| AND F | Approximate annual return excluding dividends |
|---|---|
| DGRO | Approximately 9.1 % |
| VYM | Approximately 6.9 % |
| VHYL | Approximately 2.8 % |
Over the period studied, DGRO achieved the best capital growth excluding dividends.
This difference can be explained in particular by its strategy focused on dividend growth and by its strong exposure to the American market.
👉 Best historical yield excluding dividends: DGRO
Which ETF offers the most tax advantages in Switzerland?
The taxation of ETFs is more complex than a simple comparison of dividend yield.
In Switzerland, dividends are often taxed more heavily than capital gains. Therefore, The best ETF from a tax perspective is the one that has the best growth and distributes the fewest dividends.
During the period analyzed, the DGRO ETF achieved the best growth and distributed the fewest dividends..
Thus, it is the most tax-efficient option. However, it would be too simplistic to claim that DGRO is automatically the best tax choice simply because it pays out fewer dividends.
👉 Taxation: Historically DGRO, but this should be analyzed according to each investor's profile.
Which one has the lowest fees?
The fees are not limited to the TER (ETF management fee). The following must also be taken into account:
- broker's transaction fees
- any potential exchange fees
- childcare fees
However, the TER trains used in this comparison are approximately:
| AND F | Approximate TER |
|---|---|
| VYM | 0,06 % |
| DGRO | 0,08 % |
| VHYL | 0,29 % |
Based solely on the TER (regional express train) criterion, VYM is the least expensive., but closely followed by DGRO.
👉 Lowest management fees: VYM
Which ETF has historically achieved the best net return?
It is possible to make an estimate of the net return taking into account costs and taxes.
However, this estimate remains theoretical. Actual taxation depends in particular on the country and canton of residence, income, broker, and the investor's personal circumstances.
Using the simplified assumptions employed in this article, the historical ranking is:
- DGRO
- VYM
- VHYL
DGRO maintains its lead thanks to its best historical performance over the period studied.
However, this does not mean that it will offer the best net return over the next ten years.
👉 Estimated best historical net return: DGRO
Other attractive dividend ETFs
The ETFs presented in this article are obviously not the only ones available. There are several other high-quality ETFs that may also be suitable depending on each investor's objectives.
Among the best known, we can notably mention:
| AND F | Special feature |
|---|---|
| HDV | Selects American companies renowned for the strength of their dividends and their financial health. |
| SCHD | Very popular in the United States, it favors quality companies with sustainable and growing dividends. Its performance history is excellent, but it is not easily accessible to all European investors. |
| SDY | Invests in US companies that have increased their dividends for many consecutive years ("Dividend Aristocrats"). |
| FUSD | An Irish-domiciled UCITS ETF that selects developed companies offering quality dividends. An attractive alternative for European investors. |
| SPYD | Invests in S&P 500 stocks offering the highest dividend yields. Prioritizes immediate income over dividend growth. |
I chose to compare VYM, DGRO and VHYL, because I consider them to be three complementary approaches:
- VYM represents a strategy focused on high dividends in the United States
- DGRO prioritizes long-term dividend and capital growth
- VHYL provides global diversification with a generally higher dividend yield.
In my opinion, these three ETFs cover most of the needs of investors looking to build a dividend-oriented portfolio. However, it's worth noting that other options are available.
Summary of the comparison
| Criteria | ETF that stands out |
|---|---|
| Best historical performance over 10 years | DGRO |
| Greater geographical diversification | VHYL |
| Larger number of companies | VHYL |
| safest ETF | No obvious winner |
| Most passive investment, simplicity of investment and management time | Equality |
| Distribution of the highest dividend | VHYL |
| Frequency of distributions | Equality |
| Best historical performance excluding dividends | DGRO |
| Lowest management fees | VYM |
| Historically the least taxed ETF in Switzerland | DGRO, |
| Best overall net historical performance | DGRO |
My opinion on these three ETFs
In my opinion, the choice depends primarily on the desired objective.
| AND F | For which investors? |
|---|---|
| DGRO | Investors seek a balance between capital growth and increasing dividends. DGRO focuses on US companies that consistently raise their dividends, rather than those that only offer the highest dividends. |
| VYM | Investors seeking a relatively high dividend yield while maintaining exposure to large US companies may find VYM suitable for those wishing to combine regular income, long-term growth potential, and very low management fees. |
| VHYL | Investors who want global diversification and wish to obtain 3-4% in annual dividends. |
Personally, I believe that DGRO has historically offered the best balance between capital growth and dividend growth.. Moreover, it is historically the least taxable ETF in Switzerland.
However, I do not consider it automatically superior depending on the situation and stock market objectives.
The best ETF will always depend on the strategy, investment horizon, risk tolerance, taxation and the composition of the portfolio already held.
Conclusion: VYM, VHYL or DGRO?
Regarding the historical period studied, DGRO achieved the best overall performance. Its strategy, focused on dividend growth, appears to have favored both capital growth and increased distributions.
VYM also achieved good results, with a performance slightly lower than that of DGRO, but with lower management fees.
VHYL It is distinguished primarily by its global diversification, its large number of companies, and its historically higher dividend yield compared to DGRO or VYM. However, its past performance has been weaker and its management fees higher.
My ranking of the 3 ETFs
If I analyze the period analyzed, my ranking among the 3 ETFs is:
- DGRO = best past performance and the least taxed, but also the one that distributed the fewest dividends
- VYM = A very good compromise between high dividends, ETF growth and low fees
- VHYL = for global diversification and the one that has distributed the most dividends, but also historically, the one that has obtained the lowest overall return and the one that has been taxed the most.
As I often say,”In the stock market, you can't win everywhere.”.
FAQ: The Top 3 High Dividend ETFs
What is the best high-dividend ETF?
There is no single best dividend ETF for all investors. Based on the historical performance examined in this article, DGRO achieved the best overall performance. However, VYM constitutes an excellent compromise between high dividends, low fees and growth, while VHYL is particularly attractive for investors seeking global diversification and higher dividend yields.
Which ETF distributes the highest dividends?
Of the three ETFs compared, VHYL is the one that has historically distributed the highest dividend yield, with approximately 3.8 % per year. VYM is located around 2,8 % and DGRO around 2,4 %. However, a higher dividend does not necessarily mean a better total return in the long term.
Which dividend ETF is the most profitable?
Over the period studied (2015 to 2025), DGRO It has posted its best historical performance thanks to strong growth in both its capital and dividends. However, past performance is not indicative of future results. Choosing an ETF should also take into account diversification, fees, taxation, and your investment strategy.
Which dividend ETF should I choose in Switzerland?
For a Swiss investor, several criteria are important: taxation, fees, diversification, and return. Historically, DGRO It has proven particularly attractive due to its growth and lower dividend yield, which can limit dividend taxation. However, the best choice always depends on your personal circumstances.
Are dividend ETFs better than an S&P 500 ETF?
Not necessarily. In the long term, an ETF tracking the S&P 500 has often delivered higher returns than many dividend ETFs. Conversely, a dividend ETF typically provides a regular income stream through quarterly distributions. The two approaches can therefore be complementary within a diversified portfolio.
What is the difference between VYM, DGRO and VHYL?
The three ETFs follow different strategies. VYM invests in American companies that already pay high dividends. DGRO favors American companies that regularly increase their dividends. VHYL, Meanwhile, it invests in high-dividend companies spread across the world.
Are dividend ETFs risky?
Yes. Even though the selected companies are often more mature, a dividend ETF remains an equity investment. Its value can therefore fluctuate significantly depending on the performance of the financial markets. Dividends are never guaranteed and can be reduced or eliminated if the companies encounter difficulties.
How often do dividend ETFs pay dividends?
The three ETFs compared in this article (VYM, DGRO And VHYL) generally distribute dividends four times a year, This represents a distribution every three months. The amount of dividends may vary from quarter to quarter depending on the profits made by the companies held in the ETF.
Top 3 High Dividend ETFs
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