4 ETFs with dividend yields above 3% that are also beating the S&P 500 in price growth this year
Dividend funds are booming in 2026. The rotation from expensive tech stocks into value names has pushed some dividend ETFs to record highs, and their total return has beaten the broader market for the first time in years. But this price growth has pushed their dividend yields down, and the 3% threshold has gone from a comfortable certainty to a level that few funds can still reach. Which four funds still meet it today and have the potential to potentially increase their dividend even further?
Key points
Dividend ETFs are beating the S&P 500 this year, and some have made over 30%. But their extraordinary growth has created a problem that could fundamentally change their attractiveness.
The fund with the highest dividend has done the worst over the long term. Conversely, the one with the lowest yield has brought investors the best appreciation. The difference is not coincidental; it stems from the way the individual funds select stocks.
The stated dividend yield may not be what the investor actually receives. For one of the funds, this year's changes have even caused the commonly displayed yield to practically no longer describe the current reality.
One of the funds looks like a diversified dividend ETF, but in reality, it is almost half a bet on two sectors. In another, the methodology itself systematically attracts stocks that have come under pressure.
The biggest competition for dividend ETFs today is not other stocks, but bonds. The risk-free yield has risen so high that most of the compared funds offer lower current income even before taxes.
In the full analysis, we go well beyond just the dividend yield itself. We compare the funds by performance, fees, valuation, risk, portfolio composition, concentration of largest positions, and dividend sustainability. There are clear tables, charts, and comparisons with the broader market and alternatives that today offer over 4% with virtually no equity risk. We also show why the commonly cited dividend yield can be misleading and how much the investor actually keeps after fees and taxes. The result is not just a list of four ETFs, but a complete comparison of what the investor actually pays for with each fund and what trade-off they make for a higher dividend.
After several years in which value and dividend strategies significantly lagged the tech sector, capital has begun to move in the opposite direction. The Schwab U.S. Dividend Equity ETF has beaten both the S&P 500 and the Nasdaq 100 this year, its assets have surpassed $100 billion, and its price is near an all-time high. A similar picture holds for other large dividend funds.
But this development has an unpleasant side effect. The dividend yield is calculated as the ratio of dividends paid to the fund's price. If prices rise faster than dividends, the yield automatically falls, even if the underlying companies are paying out more money. The group of funds that a year ago still offered 4% or more is now crowded around 3%.
We selected four large U.S. dividend funds that still meet this threshold and are among the most liquid instruments of their kind in the world. Each of them builds its yield on a completely different portfolio construction, which is reflected not only in the size of the dividend but mainly in the risk the investor bears.