Retirees who want their portfolio to pay them tend to fall into two camps. One buys high-yield funds for the biggest checks now. The other buys dividend growth funds, accepting smaller checks today in the hope that they grow faster than prices. Both sound sensible, and the argument between them rarely gets settled with numbers.
So here are the numbers: $100,000 put into each of eight popular dividend ETFs at the start of 2016, with every dividend taken as cash and spent, the way many retirees use them.
Two ways to buy dividends
| Fund | What it buys |
|---|---|
| VIG growth | US companies that have raised their dividends for at least ten years in a row, leaving out the highest yielders. |
| SCHD growth | One hundred companies with at least ten years of dividends, ranked by cash flow, return on equity, yield and dividend growth. |
| NOBL growth | S&P 500 companies that have raised their dividends for at least 25 years, held in equal amounts. |
| SDY growth | Companies with at least 20 years of dividend increases, weighted toward the higher yielders. |
| VYM high yield | Several hundred large US companies with above-average yields. |
| HDV high yield | Seventy-five high-yielding US companies screened for financial strength. |
| SPYD high yield | The 80 highest-yielding stocks in the S&P 500, held in equal amounts. |
| FDL high yield | One hundred high-yielding US companies with a record of steady dividends. |
The income they paid
Average yearly income from $100,000 invested at the start of 2016, dividends taken as cash:
| Fund | Income 2016 | Income 2025 | Growth a year | Years with a cut | Total income |
|---|---|---|---|---|---|
| VIG | $0 | $2,988 | — | none | $17,136 |
| SCHD | $3,307 | $8,267 | +10.7% | none | $62,254 |
| NOBL | $2,369 | $4,595 | +7.6% | 2017, 2022 | $36,654 |
| SDY | $3,903 | $5,020 | +2.8% | 2018, 2022 | $48,320 |
| VYM | $0 | $4,311 | — | none | $26,988 |
| HDV | $3,729 | $5,380 | +4.2% | 2021, 2025 | $57,266 |
| SPYD | $0 | $6,821 | — | 2023 | $41,586 |
| FDL | $3,483 | $7,604 | +9.1% | 2022, 2025 | $64,482 |
| SPY S&P 500 | $2,260 | $3,624 | +5.4% | none | $32,047 |
The label on the fund matters less than you might expect. FDL paid the most income in total ($64,482) and still grew its payout 9.1% a year. Among the high-yield funds, the ones that screened for financial strength or steady payers raised their income; SPYD, which simply buys the highest yields, cut its payout in 1 years. VIG, SCHD, VYM never cut.
When markets fell
| 2020 crash | 2022 drop | |
|---|---|---|
| Dividend growth (average) | -34.7% | -15.4% |
| High yield (average) | -37.5% | -9.0% |
| S&P 500 (SPY) | -33.7% | -24.5% |
In the 2020 crash, high-yield funds fell harder, as energy and financial stocks were among the hardest hit. In 2022, when rising rates punished fast-growing companies, the high-yield funds held up best, and both kinds of dividend fund fell far less than the S&P 500.
What was left
| $100,000 from 2016 | Income collected | Shares worth | Total |
|---|---|---|---|
| SCHD growth | $62,254 | $276,521 | $338,775 |
| FDL high yield | $64,482 | $223,053 | $287,535 |
| SDY growth | $48,320 | $218,047 | $266,367 |
| HDV high yield | $57,266 | $208,042 | $265,308 |
| VYM high yield | $26,988 | $200,614 | $227,602 |
| VIG growth | $17,136 | $206,080 | $223,216 |
| SPYD high yield | $41,586 | $168,188 | $209,774 |
| NOBL growth | $36,654 | $119,811 | $156,465 |
| SPY S&P 500 | $32,047 | $383,121 | $415,168 |
Income is only part of what a fund delivers. SCHD left the most of the eight dividend funds ($338,775), and the S&P 500 fund left more than any of them, because the fastest-growing companies of the past decade paid small dividends or none. For a retiree, that larger pile is future income too: shares can be sold when needed.
Which suits whom
- If you want the most cash now and plan to spend only the dividends, quality-screened high-yield funds have paid more and raised their payouts. Avoid funds that buy yield alone; their payouts have been the least reliable.
- If you have decades ahead or want your income to outrun inflation, dividend growth funds have grown their payouts faster and left a larger balance.
- If total wealth matters most, a broad index fund has left the most in this period, and selling a few shares turns that into income when you need it. A dividend focus is a choice about how income arrives, not a better return.
Many retirees combine them: a broad index fund at the core, with a dividend fund for part of the spending money. Compare all the dividend ETFs.
How much income does your plan need?
ReadyAimRetire works out what you can spend each year from all your accounts, Social Security and pensions, and whether dividends alone would cover it.
Questions investors ask
Is SCHD a dividend growth or a high-yield fund?
Both, in a way. It requires ten years of dividend payments and ranks companies on cash flow, return on equity, yield and dividend growth, so it ends up with a higher yield than most growth funds. In this comparison it paid $62,254 of income from $100,000 and grew its payout 10.7% a year.
Is VIG or VYM better for retirement?
VIG has paid less income but grown it faster and left a larger balance in this period; VYM has paid more each year. Which is better depends on whether you need the cash now or want it to grow. Both are low-cost Vanguard funds.
Why did SPYD cut its dividend so often?
It simply holds the highest-yielding stocks in the S&P 500. A very high yield often signals a company under pressure, and those companies are the most likely to cut, which is when the fund’s income falls.
Should retirees only spend dividends?
Spending only dividends feels safe because you never sell shares, but it limits you to high-paying funds and ties your income to companies’ payout decisions. A total-return approach, spending a set amount from dividends plus occasional sales, lets you hold a broader portfolio.
How we measured
$100,000 invested at the first close of 2016 in each fund; every distribution taken as cash. Income uses each fund’s actual distributions, adjusted for share splits (SCHD split 3-for-1 in 2024); share values use prices without the dividend adjustment. Years with a cut are calendar years whose income fell more than 1% from the year before. Crash figures run from the market’s peak to its low (February 19 to March 23, 2020; January 3 to October 12, 2022). Prices through Oct 27, 2026; before taxes. For education only, not a recommendation to buy or sell any fund.