Top 3 Dividend ETF Picks for 2026

After three years during which tech and AI stocks have been almost the only groups driving gains in the U.S. equity market, it would be easy to forget that dividend stocks still deserve consideration as long-term portfolio allocations.

Over the course of decades, dividend stocks have proven their ability to enhance risk-adjusted returns, mitigate portfolio volatility, and deliver steady income streams. This makes them ideal for both income investors and longer-term growth-oriented investors.

Heading into 2026, the U.S. economy looks like it's still in good shape. In the December projections that the Federal Reserve released this past week, it indicated that it expects real U.S. GDP growth to accelerate from 1.7% in 2025 to 2.3% in 2026. On the other hand, it just lowered the federal funds rate by a quarter-point. Generally, the central bank cuts its benchmark interest rates when it feels the economy could use a little support.

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That could mean opportunities ahead for dividend exchange-traded funds (ETFs). They've been tepid performers for some time, but any kind of economic slowdown, surge in inflation, or trouble in the labor market could drive investors to pivot back toward more defensive strategies. In that case, dividend stocks would fit right in.

Here are three dividend ETFs that I like heading into 2026.

Schwab U.S. Dividend Equity ETF

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) takes a decidedly different approach than the one that's been rewarded over the past couple of years. It screens for stocks with consistent dividend histories, strong fundamentals, value characteristics, and high yields. That strategy tends to underperform during periods when the market is all about growth, but it's one that's delivered over the long term.

Its factor mix benefits from a rotation away from mega-cap growth, something we've seen starting to happen since the beginning of November. Value and dividend stocks have begun leading again, and the Schwab U.S. Dividend Equity ETF has been beating the S&P 500. If tech momentum continues to stall out (and Oracle's earnings report would certainly give the impression that that's happening), this fund could be a prime beneficiary, much as it was throughout the 2010s when it dominated this space.

The Schwab U.S. Dividend Equity ETF pairs well with a core S&P 500 position, but this could be a good time to consider increasing your allocation to it.

WisdomTree U.S. Quality Dividend Growth ETF

I've liked the WisdomTree U.S. Quality Dividend Growth ETF (NASDAQ: DGRW) for some time. Its strategy is simple: Target companies with great fundamentals, such as return on equity and return on assets, and weight the portfolio by total dividends paid. That avoids a portfolio that overallocates into the biggest companies or the ones with the highest yields. Instead, it gives larger weightings to the companies that have rewarded shareholders the most.

The WisdomTree U.S. Quality Dividend Growth ETF can serve as a nice bridge between growth and value. It tends to hold more technology stocks than the average dividend ETF, which positions it to do well if we remain in a late-cycle rally. On the other hand, its heavy quality tilt and focus on things such as cash flow and dividend growth should prove favorable attributes if economic conditions begin to turn south.

That quality dividend growth strategy could prove to be particularly appealing in times when the direction of the economy is unclear.

Vanguard International High Dividend Yield ETF

International stocks had a really good year in 2025: The combination of a falling dollar, lower central bank interest rates, and improving financials gave them a chance to shine. That has helped the Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) to deliver a 35% return year-to-date.

Given how long international stocks have lagged domestic equities, we could be in the early innings of an extended stretch of strong results for non-U.S. investments. International markets are much more dependent on sectors, such as financials and energy, instead of tech. We're already starting to see a cyclical rebound as we close out 2025. If the markets begin rotating away from tech, any fund that's light in that sector -- and the Vanguard International High Dividend Yield ETF has only a 3% allocation to tech -- could be set up to do really well.

With its 3.8% yield, the ETF can provide investors with both income and international diversification. It could pair nicely with either of the ETFs listed above or with any core S&P 500 allocation.

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