Top 3 High Dividend ETFs

There are many high-dividend ETFs. In this article, I've analyzed and compared, in my opinion, the top 3 high-dividend ETFs!

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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.

What is a high dividend ETF?

High Dividend ETF = Own hundreds of stocks that pay high dividends, in a single ETF.

In fact, a high-dividend ETF tracks the performance of all the stocks it owns.

In this case, a high dividend ETF focuses on stocks known for distributing high dividends.

Why own a high dividend ETF?

In my opinion, it's best for a shareholder to have an aggressive long-term stock market strategy. For this, an SP500 ETF is an interesting option.

On the other hand, holding a Large Dividend ETF offers other advantages than an SP500 ETF. For example:

Bringing a mixed investment to financial assets

A high-dividend ETF is a mixed investment. That is, it's an investment halfway between a defensive and an offensive stock market strategy.

Therefore, if a shareholder wants balance in their financial assets, why not own a high dividend ETF?

Have a large income regularly

Through the high dividends distributed on average every 3 months, the shareholder receives a considerable income every six months with a high dividend ETF.

Diversification

The ETFs I'm going to write about hold hundreds or thousands of stocks, making the investment diversified.

Additionally, some of the ETFs I'm going to discuss invest in stocks that the S&P 500 does not.

The 3 best high dividend ETFs?

Each shareholder will have preferences regarding the top 3 high dividend ETFs.

In my opinion and experience, here are my 3 favorite high dividend ETFs:

VYM = ETF that focuses on US stocks that distribute high dividends*

VYHL = ETF that focuses on global stocks that distribute high dividends*

DGRO = ETF that selects US stocks with a history of dividend growth*

In this article, we will understand why I chose the 3 high dividend ETFs 😊

Which one historically has the best gross yield?

Let's start by analyzing the gross return, and at the end of this article we could make an estimate regarding the net return.

According to each ETF's official website, here is the annualized gross return over 10 years, between May 2015 and May 2025:

DGRO = 11.5%
VYM = 9.7%
VHYL = 6.7%

To assess the performance of each ETF, I simulated a $10,000 investment 10 years ago. How much would the investor have today, without having added a cent of their own money?

Invest	Gross return in 10 years	Total gross return
DGRO	11,5%	29,699 USD
VYM	9,7%	25,938 USD
VHYL	6,7%	19,126 USD

Best gross yield -> DGRO ETF

Which one is more diverse?

Diversification will depend on the sensitivity of each investor.

Here is a summary regarding the diversification of each investment:

DGRO = US shares
VYM = US stocks
VHYL = global equities

Therefore, the VHYL ETF is the most diversified.

If we analyze the number of shares, here is the number of shares per ETF:

VYM = 585 shares
VHYL = 2,100 shares
DGRO = 407 shares

Additionally, the VHYL ETF is the ETF that holds the most shares.

Best diversification -> ETF VHYL

Which one is the safe one?

The VYM and VHYL ETFs are owned by the Vanguard mutual fund, while the DGRO ETF is owned by the iShares mutual fund.

In my opinion, both investment funds are excellent. They are also known for their stability and high returns.

Risk of bankruptcy or loss of money -> equivalent

Which one is more passive?

The 3 large dividend ETFs are tied.

Indeed, once invested in the ETF, the shareholder does not have to do anything, except receive dividends every 3 months and pay taxes. In reality, it is a very passive investment for the client 😉

Investment Passivity -> equivalent

Which one is easier to invest in?

The 3 are tied.

To invest in an ETF, all you need is an easy-to-use trading account.

The easiest to invest -> The 3

Which one takes the least management time?

The 3 ETFs are investments that take less than 5 minutes per month to manage.

The one that takes the least management time -> The 3 (5 minutes per month)

The investment with the least volatility?

As these are the 3 largest dividend ETFs, the price fluctuation is very similar.

In reality, price variability is quite high with a high dividend ETF.

Although the 3 ETFs mentioned have achieved good returns over 10 years, during the month of June 2022 for example, the 3 ETFs lost around 14%.

Least volatile in yield -> equivalent (high)

Which one distributes better dividends?

According to each ETF's website, here's a summary:

VYM = 2.8% in dividends per year on average
VHYL = 3.9% in dividends per year on average
DGRO = 2.4% in dividends per year on average

The best in dividend distribution -> ETF VHYL

Which one distributes dividends most often?

In reality, all 3 ETFs distribute dividends 4 times a year. And at very similar times 😊

The one that distributes dividends most frequently -> The 3 ETFs (every 3 months)

Which has a better non-dividend yield?

Both the VYM ETF and the DGRO ETF have achieved good returns excluding dividends. Although the return excluding dividends is favorable to the DGRO ETF.

Note that the VHYL ETF achieved an acceptable performance but it is far behind the performance of DGRO and VYM.

Therefore, here is the ranking:

DGRO (approximately 9.1% annualized over 10 years)
VYM (approximately 6.9% annualized over 10 years)
VHYL (approximately 2.8% annualized over 10 years)

Best yield excluding dividends -> ETF DGRO

Which one is better tax-wise in Switzerland?

As for the taxation of a high dividend ETF, it is quite simple to understand in Switzerland.

The return on the stock = very little tax
Dividend yield = 15% or less

Indeed, the VYHL ETF is domiciled in Ireland. As a result, the tax will be 15% on the 3.9% of dividends received. Once the tax return is completed.

Regarding the VYM ETF and the DGRO ETF, they are domiciled in the USA. Therefore, the initial tax rate is 30%. However, once the W8BEN form is completed, the tax rate will be:

15 % out of the 2.8 % of dividends received by the VYM ETF
15 % out of the 2.4 % of dividends received by the DGRO ETF

Without forgetting, Once the tax return is completed, the tax will be less than 15% for VYM and DGRO ETFs.

Therefore, as the DGRO ETF receives the least dividends of the 3 ETFs, it is the least taxed ETF.

Here is the ranking:

DGRO = Less than 15% on 2.4% of dividends
VYM = Less than 15% on 2.8% of dividends
VHYL = 15% of 3.9% of dividends

The best tax-wise -> ETF DGRO

Which one has the most commissions (excluding taxes)?

The fees for a large dividend ETF are:

TER (ETF management fees)
Stock Market Account Fees

Note that the TER is the commission that the investment fund requests in order to pay for the operation of the ETF.

As for the trading account fees, with a cheap trading account (e.g. Yuh or Interactive Brokers) the fees are around 0.5%.

Therefore, here are the total commissions for purchasing ETFs.

VYM = 0.06% of TER + 0.5% for stock market purchase = 0.56%
VHYL = 0.29% of TER + 0.5% for stock market purchase = 0.79%
DGRO = 0.08% OF TER + 0.5% for stock market purchase = 0.58%

In conclusion, regarding commissions, here is the ranking:

VYM = 0.56%
DGRO = 0.58%
VHYL = 0.79%

The least expensive in fees -> ETF VYM

Which one has the best net return?

After writing this article, it is possible to estimate your net return. Although past performance is no guarantee of future performance!

Note that this table should be taken as an estimate and not as an official table.

Invest	Gross yield	Taxation in Switzerland	Commissions	Total net return (estimate)
DGRO	11,5%	0.36% approximately (15% of 2.4%)	0.58%	10,5% annualized
VYM	9,7%	0.42% approximately (15% of 2.8%)	0.56%	8,6% annualized
VHYL	7%	0.58% approximately (15% of 3.9%)	0.79%	5,6% annualized

Example with 10,000 USD invested

I created an example based on the estimated net return of each investment. I assumed each investor invested $10,000 10 years ago. What will the investor's net return be today? (Not including inflation)

Invest	Total net return in 10 years without inflation
DGRO	27,140 USD
VYM	23,030 USD
VHYL	17,244 USD

Therefore, with this example, in 10 years, the DGRO ETF is more profitable by a few thousand CHF compared to the VYHL ETF and the VYM ETF. This is not insignificant.

Indeed, in this example, in 10 years, the DGRO ETF earns almost USD 4,200 more than the VYM ETF and almost USD 10,000 more than the VHYL ETF.

The best net return -> The DGRO ETF

Conclusion

Let’s analyze together the summary of this article, the top 3 high dividend ETFs! 😊

	SCPI, ETF VHYL or ETF VYM
The best gross yield (historically)?	ETF DGRO
The most diverse?	ETF VHYL
The safest?	Similar
The most passive?	Similar (Very passive)
The easiest way to invest?	Similar (Very simple)
The one that takes the least management time per month?	Similar (5 minutes per month)
The investment with the least volatility?	Similar (high)
The best in dividend distribution?	ETF VHYL
Which one distributes dividends most often?	Similar (every 3 months)
The best yield without counting dividends?	ETF DGRO
The best tax situation in Switzerland?	ETF DGRO
The one with the least commissions (excluding taxes)?	ETF VYM
The best net return (historically)	ETF DGRO

👉 The DGRO ETF is (historically) the most profitable ETF compared to the VYM ETF and the VYHL ETF over the long term.

However, the performance of the VYM ETF is close to the DGRO ETF.

In fact, the main advantage of the VHYL ETF is its high quarterly dividends. Furthermore, it is globally diversified, unlike the VYM and DGRO ETFs, which focus on the US stock market.

My Opinion on the Top 3 High Dividend ETFs

The 3 ETFs offer an opportunity to diversify financial assets over the long term, with a mixed strategy halfway between a defensive strategy and an offensive strategy.

Therefore, over a period of more than 5 years, the return of a high dividend ETF will likely be less efficient than that of the S&P 500. On the other hand, a high dividend ETF will most likely be more profitable than a savings account, moreover, with good dividends distributed every 3 months.

In my opinion, shareholders who are looking for:

Good long-term performance
Good taxation
Average dividends

👉 In this case, the DGRO ETF should be considered a good option.

On the other hand, shareholders who prefer:

Very high dividends every 3 months
Global diversification

👉 In this case, investors should consider the VHYL ETF.

However, it should be noted that with the VHYL ETF, shareholders obtain a lower yield and slightly higher taxation compared to the DGRO ETF.

The top 3 high dividend ETFs!

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