ProShares vs. iShares: Is NOBL or HDV the Better Dividend ETF for Investors?

While both funds focus on income, the iShares Core High Dividend ETF (NYSEMKT:HDV) offers a lower expense ratio and a higher yield than the ProShares S&P 500 Dividend Aristocrats® ETF(NYSEMKT:NOBL). (The term Dividend Aristocrats® is a registered trademark of Standard & Poor's Financial Services LLC.)

Investors seeking consistent income often turn to dividend-focused funds for stability and yield. While both of these exchange-traded funds target dividend payers, they utilize distinct selection criteria. This comparison examines how the iShares offering compares with the popular Dividend Aristocrats® strategy from ProShares.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The cost of ownership differs significantly between these two funds. The iShares Core High Dividend ETF is more affordable with an expense ratio of 0.08%, whereas the ProShares S&P 500 Dividend Aristocrats® ETF charges 0.35%. Furthermore, the iShares fund currently offers a higher payout to its investors.

Performance & risk comparison

What's inside

The iShares Core High Dividend ETF (HDV) targets 75 American companies that have been screened for financial health and high dividend yields. Its sector exposure is heavily weighted toward defensive and value-oriented areas, including healthcare at 24% and energy at 20%. Its largest positions include ExxonMobil at 7.12%, Abbvie at 6.57%, and Chevron at 5.40%. The fund was launched in 2011. iShares Core High Dividend ETF has paid $0.79 per share over the trailing 12 months, which on its recent ~$28.74 share price works out to a 2.8% yield.

In contrast, the ProShares S&P 500 Dividend Aristocrats® ETF (NOBL) follows an equal-weighted index of S&P 500 companies that have increased dividends for at least 25 consecutive years. This "aristocrat" requirement leads to a different sector mix, favoring industrials at 20% and financial services at 13%. It currently holds 70 stocks, and its largest positions include West Pharmaceutical Services at 1.81%, Abbvie at 1.73%, and Franklin Resources at 1.70%. The fund was launched in 2013. ProShares S&P 500 Dividend Aristocrats® ETF has paid $1.16 per share over the trailing 12 months, which on its recent ~$56.59 share price works out to a 2.0% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which dividend ETF is the better long-term buy?

These two dividend ETFs have delivered very similar returns since 2013, with NOBL rising 10.7% annually, versus HDV’s 10.0%. While I think both ETFs are excellent options for investors looking to generate income, I think HDV is slightly more appealing to me for a couple of small reasons.

First, HDV’s dividend yield is nearly 50% higher, and its expense ratio is less than one-fourth that of NOBL’s. Furthermore, HDV has delivered similar returns -- superior over the last year and five years -- while maintaining a much lower beta and slightly smaller drawdown, meaning it is probably a smoother ride.

That said, neither ETF is perfect. HDV is subject to higher turnover due to its screener requirements. Meanwhile, NOBL has lower stock turnover, but many of its dividend growth stocks offer only “token” dividend increases, keeping them in the group without actually delivering much dividend growth.

Ultimately, I’d rather have the higher yield, smoother ride, and lower cost from HDV, especially since the two dividend ETFs have historically generated similar returns.

Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Chevron, and ProShares S&P 500 Dividend Aristocrats ETF. The Motley Fool has a disclosure policy.