Why I'm Loading Up on These 3 High-Dividend ETFs for Passive Income

After a number of years of consistent underperformance, dividend ETFs are demonstrating once again why they belong in a portfolio.

This year, while the S&P 500 is virtually flat and the tech sector sits in the red, the WisdomTree U.S. Total Dividend ETF, which could be considered a broad benchmark for the dividend stock universe, is up nearly 6% (as of 2/12/26).

High-yield strategies have generally done even better. Not only are income investors enjoying some long-overdue capital growth from their dividend portfolios, but they're also able to capture 3%-4% yields, and sometimes more, on the side.

We're still less than two months into 2026, but this trend has sustained long enough that it feels like it could extend well into the rest of the year. That means there's still an opportunity to capture not just the share price upside but the big income stream as well.

Depending on your preference, here are three high-dividend ETFs that look primed for the next several months and beyond.

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1. The pure high-yield play

The Vanguard High Dividend Yield ETF (NYSEMKT: VYM) tracks the FTSE High Dividend Yield Index. It starts with a broad universe of U.S. dividend-paying stocks, calculates the expected dividend yield over the upcoming 12 months, and selects the top half of yields for inclusion in the portfolio. The end result gets market cap-weighted. It currently yields 2.3%.

This ETF doesn't have a terribly targeted or robust strategy when it comes to building a high-yield stock portfolio. But if your goal is simply to use a broadly diversified and relatively low-risk way to capture a high yield, the Vanguard High Dividend Yield ETF can do that.

There's no dangerous attempt to push the risk profile to improve yield. The fund holds more than 500 different stocks, so there's no big concentration risk. The 0.04% expense ratio is one of the cheapest you'll find anywhere in this category.

I'd argue that there are better ways to target high-yield stocks. But for a no-frills option to elevate your yield, this fund does the job.

2. The quality income choice

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) follows the performance of the Dow Jones U.S. Dividend 100 Index. It's one of the few ETFs that considers dividend growth, dividend quality, and high yield in its selection process.

The final portfolio selects the 100 stocks that demonstrate the best combination of all factors (REITs are excluded) and then weights them by market cap. It currently yields 3.4%.

This would, in my opinion, be the better way to invest in high-yield stocks. It specifically targets the higher end of the yield spectrum, so you automatically get the income boost. But it layers on quality screens, such as return on equity (ROE) and cash flow-to-debt, to ensure that these yields are healthier and more sustainable. The dividend growth screen ensures that companies are committed to their shareholder payouts long-term.

I like strategies that use different screens to act as cross-checks against each other. The Schwab U.S. Dividend Equity ETF does one of the best jobs of identifying the best of the best dividend stocks. The current yield, triple that of the S&P 500, ensures big passive income as well.

3. The ultra-high-yield option

The JPMorgan Equity Premium Income ETF (NYSEMKT: JEPI) is not a pure dividend stock portfolio. Instead, it actively selects a portfolio of over 100 low-volatility stocks that still exhibit above-average risk/return characteristics and then writes covered call options on the S&P 500 index to generate a high yield. It currently yields 7%.

With covered call strategies, you give up some share price upside in exchange for the high yield. That means the JPMorgan Equity Premium Income ETF is more geared toward pure income seekers as opposed to those who are seeking a growth and income combination.

I like that the fund's foundation is a portfolio of low-volatility stocks. These stocks are often more durable and backed by solid fundamentals. That makes them ideal for long-term income generation. It won't have the same risk/return profile as the ETFs listed, but that can help diversify an investor's income stream.

David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.