In an uncertain market, the potential for steady income is back in style. While growth stocks have dominated headlines in recent years, many investors are now rediscovering the appeal of dividends – regular cash payments that can help smooth returns and compound wealth over time.
Dividend ETFs are a straightforward way to take this positioning. With a single investment, you can access dozens or even hundreds of income paying assets across different regions and sectors, all without having to pick individual stocks.
In this guide, we’ll explore the top dividend ETFs available in 2025, why they stand out, and how they can fit into your long term investment strategy.
What are dividend ETFs?
Dividend ETFs are funds that hold a basket of dividend paying shares. Instead of choosing individual income stocks, investors can buy one ETF and instantly gain diversified exposure to companies which aim to distribute income.
These ETFs typically focus on:
- High yield companies: firms with above average dividend payouts relative to their share price
- Dividend growth leaders: businesses that regularly increase dividends each year
- Quality income portfolios: a blend of strong balance sheets and sustainable payout ratios
They offer three key advantages:
- Aim for steady income: you can aim to receive regular dividend distributions, or reinvest them automatically for compounding
- Diversification: spread risk across sectors, regions, and individual companies
- Convenience: trade like a single stock, often with low ongoing costs compared to actively managed income funds
Why dividend ETFs are popular in 2025
Dividend ETFs have made a strong comeback this year, and it is easy to see why. With interest rates starting to settle, many investors are looking for ways to keep up with inflation. Companies that aim to pay regular dividends can offer that balance, providing a potential steady income stream that can feel more dependable than the ups and downs of the market.
They are also popular for their defensive qualities. Most dividend ETFs hold shares in established businesses that tend to generate consistent profits. That stability can be reassuring during uncertain times and can help cushion a portfolio when markets are volatile. It’s important to remember, however, that past performance is not a reliable indicator of future returns – no company is guaranteed to keep making money.
The power of compounding adds to their appeal. Reinvesting dividends, either automatically through an accumulating ETF or by manually putting the income back to work, gives your money the chance to grow on itself and build over time.
Because dividend ETFs can also be held inside ISAs or SIPPs, investors can often enjoy any income they receive without paying tax or with valuable tax advantages. It is a simple, low maintenance way to combine consistent potential income with long-term growth potential.
All of these factors make dividend ETFs a natural choice for anyone who wants a portfolio that feels more balanced, offering both the chance for regular income and the potential for capital growth over the years.
The top 5 dividend ETFs for investors in 2025
With plenty of choices available, it helps to focus on the most widely held and trusted options. The funds below cover a range of strategies, from high yield global exposure to covered call income and broad US market trackers that have built strong records of delivering steady returns.
This list of ‘Top Dividend ETFs’ is based on dividend-paying ETFs held in InvestEngine DIY portfolios. Top ETFs have been calculated by number of buy orders (by number of clients) between October 2024 and October 2025.
Invesco Nasdaq 100 ETF (ticker: EQQQ)
Provider: Invesco
Strategy: Tracks the Nasdaq 100 Index by holding the largest non financial companies listed on the Nasdaq exchange. The focus is on tech and growth oriented stocks, many of which now also pay dividends.
See the latest data on InvestEngine >
Why consider it:
- Access to global tech and innovation leaders with evolving dividend profiles
- A convenient way to combine income potential with the chance of long-term growth
- Suitable for investors who seek both regular payouts and exposure to a dynamic sector
| Key Details | |
| Launched | 19 December 2002 |
| Fund Size | ~£12,001 million |
| Ongoing Charges | 0.30% |
| Dividend Type | Distributing (paid quarterly) |
| Dividend yield | 0.30% |
| Region Focus | United States |
Vanguard S&P 500 ETF (ticker: VUSA)
Provider: Vanguard
Strategy: Tracks the S&P 500 Index by holding the 500 largest US companies. The fund offers broad US large cap exposure and includes many firms with long track records of dividend payments.
See the latest data on InvestEngine >
Why consider it:
- A low-cost, highly liquid way to access major US dividend paying companies and growth opportunities
- Broad diversification across sectors via large reliable firms
- Suitable as a core portfolio holding for potential income and growth
| Key Details | |
| Launched | 22 May 2012 |
| Fund Size | ~£56,119 million |
| Ongoing Charges | 0.07% |
| Dividend Type | Distributing (paid quarterly) |
| Dividend yield | 0.75% |
| Region Focus | United States |
Vanguard FTSE All-World High Dividend Yield ETF (ticker: VHYL)
Provider: Vanguard
Strategy: Invests in a broad range of large and mid-sized companies around the world that are known for historically paying higher than average dividends, across both developed and emerging markets.
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Why consider it:
- Offers globally diversified exposure to companies with historically strong dividend payouts rather than just yield focused on one region
- Helps investors seeking regular income while still wanting growth potential via global equity markets
- Useful as a core income fund for a portfolio aiming for steady dividends plus capital appreciation
| Key Details | |
| Launched | 25 May 2013 (as Distributing version) |
| Fund Size | ~£4.5 billion |
| Ongoing Charges | 0.29% |
| Dividend Type | Distributing (paid quarterly) |
| Dividend yield | ~2.96% |
| Region Focus | Global (mixed developed + emerging markets) |
Vanguard FTSE All-World ETF (ticker: VWRL)
Provider: Vanguard
Strategy: Tracks the FTSE All-World Index, providing broad exposure to large and mid cap companies across developed and emerging markets globally. Many of the holdings aim to pay dividends, making this fund a blend of growth and income.
See the latest data on InvestEngine >
Why consider it:
- Broad global exposure through a single low-cost ETF covering both developed and emerging markets
- Regular dividend payments combined with long-term growth potential
- Simple, diversified core holding suitable for building a balanced global portfolio
| Key Details | |
| Launched | 22 May 2012 |
| Fund Size | ~£31 billion |
| Ongoing Charges | 0.22% |
| Dividend Type | Distributing (paid quarterly) |
| Dividend yield | 1.60% |
| Region Focus | Global (both developed and emerging markets) |
Global X Nasdaq 100 Covered Call UCITS ETF (ticker: QYLP)
Provider: Global X
Strategy: The fund holds a portfolio indexed to the Nasdaq 100 and simultaneously sells one month at the money call options on that index. This covered call overlay aims to generate additional income while retaining exposure to large U.S. technology and growth companies.
See the latest data on InvestEngine >
Why consider it:
- Offers high income potential by combining equity exposure with option premium income
- Paid monthly, so it appeals to investors looking for regular cash flow
- Provides a differentiated approach within global equity/income allocations, especially for those comfortable with covered call strategies
| Key Details | |
| Launched | 22 November 2022 |
| Fund Size | ~£437 million |
| Ongoing Charges | 0.45% |
| Dividend Type | Distributing, monthly |
| Dividend yield | 12.33% |
| Region Focus | United States (via Nasdaq-100 exposure) |
Comparing the top dividend ETFs side by side
While all these ETFs aim to deliver steady income, each does it in its own way. The table below lets you quickly see how they stack up on yield, cost, and coverage, so you can find the one that best fits your portfolio.
| ETF Name | Ticker | Strategy | TER | Dividend Type | Dividend Yield | Launched | Region Focus | Fund Size |
| Invesco Nasdaq 100 | EQQQ | Passive (Nasdaq 100 Index) | 0.30% | Distributing (quarterly) | 0.30% | 19 Dec 2002 | United States | £12,001m |
| Vanguard S&P 500 | VUSA | Passive (S&P 500 Index) | 0.07% | Distributing (quarterly) | 0.75% | 22 May 2012 | United States | £56,119m |
| Vanguard FTSE All-World High Dividend Yield | VHYL | Passive (FTSE All-World High Dividend Yield Index) | 0.29% | Distributing (quarterly) | 2.28% | 25 May 2013 | Global | £4,500m |
| Vanguard FTSE All-World | VWRL | Passive (FTSE All-World Index) | 0.22% | Distributing (quarterly) | 1.60% | 22 May 2012 | Global | £31,000m |
| Global X Nasdaq 100 Covered Call | QYLP | Passive (Nasdaq 100 Covered Call Index) | 0.45% | Distributing (monthly) | 12.33% | 22 Nov 2022 | United States | £437m |
Dividend ETFs vs growth ETFs: which is right for you?
Dividend ETFs and growth ETFs both invest in equities, but they cater to different goals and risk profiles. Heres a break down of how they compare:
Dividend ETFs
- Focus on companies that return profits to shareholders through regular dividends
- Typically include mature, stable businesses with strong cash flow
- Offer potential for steady income and lower volatility
- Reinvested dividends can fuel long term compounding
Growth ETFs
- Target companies that reinvest profits to expand quickly rather than paying dividends
- Common in sectors like technology, healthcare, and innovation
- Offer higher potential for capital gains but also higher risk and volatility
- Performance tends to shine when markets are optimistic and growth is rewarded
Which suits you?
If your goal is income and stability, dividend ETFs can potentially anchor your portfolio.
If you’re aiming for long-term capital growth potential, growth ETFs may be a better fit.
Many investors combine both approaches, using dividend ETFs for income and growth ETFs for potential long-term appreciation.
Key factors to consider before choosing a dividend ETF
Dividend yield vs growth:
A high yield can be tempting, but it often comes with trade offs. Sometimes a large payout reflects slower business growth or a falling share price. A lower but steadily rising dividend can be a healthier sign of sustainable earnings.
Dividend frequency:
Some ETFs aim to pay dividends quarterly, others only once or twice a year. Choose a schedule that matches your goals. Regular payments suit those who want income now, while less frequent payouts are fine if you plan to reinvest.
Accumulating vs distributing:
Accumulating ETFs automatically reinvest dividends. Distributing ETFs pay income out in cash. The best choice depends on whether you aim to build wealth over time or draw income as you go.
Sector exposure:
Many dividend ETFs tilt toward financials, energy, or utilities. These sectors can offer reliable payouts but less exposure to faster growing areas like technology. A balanced mix helps avoid overconcentration.
Costs (TER):
Even small fee differences matter. A lower ongoing charge means more of your money stays invested and working for you.
Use the InvestEngine Fee Calculator to see how fees can impact your portfolio over the long term.
Size and liquidity:
Larger ETFs tend to be easier to trade and come with tighter spreads. Smaller funds can still perform well, but always check trading volume and fund size before investing.
Risks and considerations when investing in dividend ETFs
Dividend ETFs can be a steady source of potential income, but they are not without risk. Dividends themselves are never guaranteed. Companies can cut or suspend payments during difficult periods, which can quickly reduce income and impact prices.
Sector concentration is another consideration. Many income focused funds hold larger positions in established industries such as financials, energy, or utilities. These sectors can provide reliable dividends but may lag behind faster growing areas of the market.
If the ETF invests globally, currency movements can also affect returns. Changes in exchange rates can boost or reduce the value of overseas income once it is converted back into pounds.
Dividend stocks can also react to shifts in interest rates. When rates rise, bonds and cash become more competitive income options, which can temporarily weigh on dividend paying shares.
Finally, even the most stable dividend ETFs still move with the wider market. Prices can fluctuate in the short term, so they are best held with a long-term view in mind.
How to buy dividend ETFs easily with InvestEngine
Looking to invest in dividend ETFs? InvestEngine makes it simple, low cost, and flexible, whether you are building a portfolio for income, growth, or a mix of both.
Why use InvestEngine?
✅ No trading or platform fees
Buy and sell dividend ETFs commission free, so more of your money stays invested and earning income (ETF costs apply).
✅ Powerful tools
Track your holdings, compare income options, and adjust your portfolio with ease.
✅ Automate your investing
Set up a Savings Plan to invest regularly. Choose the amount and frequency, and InvestEngine handles the rest, helping you build long term dividend income over time.
✅ Flexible account options
Open an ISA, SIPP, general investment account, or business account, all with no platform fees on DIY portfolios.
Start investing in dividend ETFs the easy way and grow a portfolio designed for steady income and long term returns.
In summary
Dividend ETFs are a straightforward way to generate potential regular income while keeping your portfolio diversified and cost effective.
Going into 2026, as markets balance between higher rates and steady economic growth, these funds offer a blend of stability and potential capital appreciation. Whether you prefer high yield opportunities or consistent dividend growers, they can play a valuable role in almost any long term strategy.
And with InvestEngine’s commission-free trading, flexible accounts, and automated investing tools, adding dividend ETFs to your portfolio couldn’t be simpler.
Important information
Capital at risk. The value of your investments can go down as well as up, and you may get back less than you put in.
Tax treatment depends on individual circumstances and is subject to change. ETF costs also apply.
This content is for information only and is not financial advice. If in doubt you may wish to consult a professional adviser for guidance.