Best High Dividend ETF 2026: 5 Funds Yielding Up to 11.6% for Passive Income

Finding the best high dividend ETF is crucial for passive income. This guide reveals 5 top ETFs: JEPQ yields 11.6% via covered calls, VYMI offers 3.64% with international diversification, VIG provides 1.57% with $120.4B assets, HYBL delivers 6.62% from bonds, and DIVO generates 1.55% monthly.

Why High-Yield ETFs Matter For Passive Income

If you’re thinking about retirement, one of the last things you need to worry about is consistent cash flow. Instead, you’ll want your money to help make you money. One way to achieve this is with high-yielding exchange-traded funds (ETFs). With high-yield funds, you aren’t constantly timing withdrawals or watching market swings. Instead, these funds are passive investment ideas that can deliver consistent income while still offering long-term growth potential.

Some of the best options for finding stocks with high yields are exchange-traded funds. ETFs offer diversification, professional management, and low costs—three traits that become increasingly important as you move from accumulation to preservation and income phases of retirement planning. Recent studies identified one single habit that doubled Americans’ retirement savings and moved retirement from dream to reality: consistent reinvestment of dividend income during accumulation years.

JPMorgan Nasdaq Premium Equity Income ETF (JEPQ): 11.6% Yield Leader

The best high dividend ETF for maximum current income is JPMorgan Nasdaq Equity Premium Income ETF (JEPQ), yielding approximately 11.6%. The ETF generates income by selling covered call options on its portfolio while also investing in U.S. large-cap growth stocks. It pays out the option premium to investors, supplementing dividends paid by its holdings. Instead of relying just on traditional dividends, JEPQ uses options to convert price movement into cash flow.

Most recently, JEPQ paid a dividend of just over 57 cents per share on January 5. Before that, it paid just over 55 cents on December 3. Before that, it paid out just over 47 cents per share on November 5. While its payouts fluctuate based on options income, the fund has consistently delivered meaningful distributions.

The covered call strategy works by selling call options on stocks the fund owns, collecting premium income from buyers. This income supplements underlying stock dividends, creating the high 11.6% yield. The tradeoff: JEPQ captures limited upside if stocks rally significantly, as gains above the call strike price go to option buyers. This makes JEPQ ideal for income-focused investors prioritizing consistent cash flow over maximum capital appreciation.

Vanguard International High Dividend Yield Fund ETF (VYMI): 3.64% Global Diversification

If you want to diversify beyond U.S. markets, the Vanguard International High Dividend Yield Fund ETF (VYMI) provides access to high-quality global income stocks, yielding 3.64%. With an expense ratio of 0.17%, the ETF targets 1,534 global companies, such as Nestlé, Novartis, Toyota, and Shell. All are established companies with strong balance sheets, global revenue streams, and histories of returning capital to shareholders.

Most recently, VYMI paid out a dividend of just over 93 cents per share on December 23. Before that, it paid just over 70 cents per share on September 23. And before that, it paid a dividend of just over $1.07 per share on June 24. While international dividends can be volatile with currency fluctuations, VYMI has delivered meaningful income over time.

Beyond yield, VYMI provides important portfolio benefit: geographic diversification. Retirees who rely heavily on U.S. stocks may be overexposed to domestic issues. By incorporating international dividend stocks, you diversify risk across global economies. When U.S. markets struggle, international markets may outperform, cushioning portfolio volatility.

Vanguard Dividend Appreciation ETF (VIG): $120.4B Growth & Income

Among the best high dividend ETF options for balanced growth and income, Vanguard Dividend Appreciation ETF (VIG) stands out. With an expense ratio of 0.05% and quarterly dividends, VIG tracks the performance of the S&P U.S. Dividend Growers Index. The ETF has just over $120.4 billion in assets under management, a well-diversified portfolio of 338 stocks, and offers a low-cost, resilient, growth-oriented option for smart investors.

Holdings include Broadcom, Microsoft, JPMorgan, Apple, Visa, Eli Lilly, and Exxon Mobil. VIG yields about 1.57% and just paid a dividend of just over 88 cents per share on December 24. Before that, it paid out just over 86 cents per share on October 1. And before that, it paid out just over 87 cents per share on July 2.

VIG’s lower yield compared to JEPQ or HYBL reflects its focus on dividend growth rather than maximum current yield. The fund selects companies with 10+ year records of increasing dividends, indicating financial strength and management’s commitment to shareholder returns. This quality focus means VIG’s yield grows over time as underlying companies raise dividends, creating inflation protection that high-static-yield funds cannot provide.

State Street Blackstone High Income ETF (HYBL): 6.62% Fixed Income

For fixed income exposure, State Street Blackstone High Income ETF (HYBL) invests in high-yield corporate bonds, senior loans, and debt tranches of U.S. collateralized loan obligations (CLOs), yielding 6.62%. With an expense ratio of 0.7%, HYBL has 683 holdings including bonds in Radiology Partners, Allied Universal, JetBlue Airways, and Michaels Cos. Most recently, it paid out a dividend of just over 16 cents per share on December 23.

As noted by SSGA.com, “The Fund’s exposure to both fixed- and floating-rate assets helps it take advantage of relative value opportunities and provide risk-adjusted returns during periods of heightened volatility.” This flexibility allows HYBL to adapt to changing interest rate environments, capturing opportunities in both rising and falling rate scenarios.

Amplify CWP Enhanced Dividend Income ETF (DIVO): 1.55% Monthly

With monthly yield of 1.55% and expense ratio of 0.56%, Amplify CWP Enhanced Dividend Income ETF (DIVO) holds large-cap companies with strong histories of dividend growth. It also uses covered call strategy on individual stocks to offer high total returns.

“DIVO seeks investment results that correspond generally to an existing strategy called the Enhanced Dividend Income Portfolio (EDIP),” as noted by AmplifyETFs.com. That strategy attempts generating income through dividends and short-term covered calls to increase cash flow and consistent annual income. The EDIP holds blue-chip stocks from the S&P 500, the Dow 30, and the S&P 100.

5 Best High Dividend ETF Comparison

JEPQ: 11.6% yield, covered calls on Nasdaq stocks, monthly payments

VYMI: 3.64% yield, 1,534 international stocks, quarterly payments

VIG: 1.57% yield, $120.4B assets, dividend growth focus, quarterly payments

HYBL: 6.62% yield, high-yield bonds and CLOs, flexible rate exposure

DIVO: 1.55% monthly yield, S&P 500 blue chips, covered call strategy

SCHD vs VYM: Quality Matters in Dividend ETFs

When evaluating the best high dividend ETF candidates, comparing SCHD (Schwab U.S. Dividend Equity ETF) versus VYM (Vanguard High Dividend Yield ETF) reveals critical differences in selection methodology affecting long-term performance.

VYM tracks the FTSE High Dividend Yield Index. It starts with broad U.S. equity universe, ranks stocks by indicated dividend yield, and includes the top half of yields in the final portfolio. Given that VYM holds more than 560 stocks, it’s not terribly selective and ends up being pretty bland. This approach prioritizes yield over quality, potentially including companies with unsustainable payouts.

SCHD follows the Dow Jones U.S. Dividend 100 Index. Its selection involves looking at multiple criteria including dividend payment history, dividend yield, and fundamentals such as cash flows, debt, and return on equity. Stocks with the best combination of these criteria make the final portfolio. SCHD’s selection criteria are much more robust, incorporating elements of dividend growth, dividend quality, and high yield throughout its process.

The quality difference matters significantly for avoiding dividend cuts and yield traps. Companies paying high dividends without strong fundamentals often cut payouts during economic downturns, causing both income loss and capital depreciation. SCHD’s quality screen helps avoid this outcome by ensuring selected companies have financial strength to maintain dividends through cycles.

FAQ

What is the best high dividend ETF for maximum current income?

JEPQ offers the highest yield at 11.6% through covered call strategies on Nasdaq stocks. However, this comes with limited upside participation if markets rally strongly. JEPQ works best for income-focused investors prioritizing cash flow over capital appreciation.

Which dividend ETF is best for retirement portfolios?

VIG balances income and growth with its dividend growth focus, yielding 1.57% with strong dividend increase history. SCHD also excels for retirement with robust fundamental screening ensuring dividend sustainability through market cycles.

Are high-yield dividend ETFs safe?

Risk varies by ETF. JEPQ and DIVO using covered calls face limited upside but generate high current income. HYBL investing in high-yield bonds carries credit risk. VIG and SCHD focusing on quality companies offer more stability. Diversifying across multiple dividend ETF types reduces concentration risk.

How are dividend ETF distributions taxed?

Most dividend ETF distributions qualify as ordinary income taxed at your marginal rate. Some qualified dividends receive preferential tax treatment at lower capital gains rates. International ETFs like VYMI may include foreign tax withholding. Consult tax professionals for specific situations.

Should I reinvest dividend ETF distributions?

During accumulation years, reinvesting dividends compounds growth significantly—the habit that doubles retirement savings according to recent studies. During retirement, taking distributions as income provides cash flow without selling shares. Strategy depends on your life stage and income needs.

What’s better: SCHD or VYM?

SCHD is clearly superior due to robust quality screening incorporating fundamentals, dividend history, and sustainability metrics. VYM simply selects top-yielding stocks without quality filters, risking dividend cuts. SCHD’s methodology better protects against yield traps and provides more resilient income streams.