1 No-Brainer High-Yield S&P 500 ETF to Buy Right Now

In 2026, dividend investors are finally keeping up with the S&P 500 (SNPINDEX: ^GSPC). After three years in which dividend exchange-traded funds (ETFs) largely lagged amid the tech and artificial intelligence (AI) rally, dividend stocks are finding themselves back in favor.

High-yield equity ETFs have performed particularly well this year. They tend to be overweight cyclical areas of the market, including energy, industrials, and materials. All three sectors are outperforming the S&P 500 year to date and are positively influencing dividend stocks' performance.

However, investing in high-yield stocks requires some care. Some of these yields are high for a reason. They could be due to a falling share price or an imminent dividend cut, both of which would be damaging to shareholder returns. But finding a good one could lead to yields four times those of the S&P 500 index, with outperformance to boot.

One of the better high-yield ETFs at the moment is the State Street SPDR Portfolio S&P 500 High Dividend ETF (NYSEMKT: SPYD).

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How SPYD targets high-dividend-yield stocks

This ETF has one of the simplest targeting strategies you'll find. It starts with the S&P 500, pulls out the 80 highest-yielding stocks from the index, and equal-weights them. That's it.

This strategy comes with positives and negatives.

On one hand, equal weighting appropriately spreads out the risk of any single stock over-influencing the portfolio. With high-yield stocks, that can be an especially important feature.

On the other hand, I've never been a big fan of yield-only selection methodologies. I generally prefer they be paired with a quality screen to ensure the dividend yields are sustainable.

The State Street SPDR Portfolio S&P 500 High Dividend ETF is one of the funds I'm less worried about in this case because history says so. It has a three-year dividend growth rate of roughly 5% and a 10-year growth rate of around 8%. This indicates that, even though the selection strategy is based solely on yield, the resulting portfolio definitely has a dividend-growth component.

Why SPYD is a great pairing with the S&P 500

One thing this ETF lacks is meaningful overlap with the traditional S&P 500 weighting. The presence of tech stocks (just 3% of the fund) is almost nonexistent. Its biggest allocations are in real estate (27%), consumer staples (16%), financials (13%), and utilities (12%). That gives it a much more defensive and cyclical tilt than you'll find in the S&P 500 or virtually any other cap-weighted broad market ETF. That makes this fund great from a diversification perspective.

The 4.4% yield is also about as high as you'll find in a reasonably diversified U.S. equity fund.

With tech dominating the stock market and investors growing more worried that the rally might be getting ready to fizzle out, adding some true diversification might be a good idea. This portfolio should perform relatively well if the S&P 500 begin to correct. The sector composition provides a mix of exposures that could lead the market much as it did when tech fell out of favor at the beginning of 2026.

The defensiveness, the high yield, and the diversification make the State Street SPDR Portfolio S&P 500 High Dividend ETF a no-brainer pickup for your portfolio right now.

David Dierking has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.