2 Best High Income ETFs for Passive Investors in 2026

Building a portfolio around high income etfs is one of the smartest strategies for investors seeking consistent passive revenue streams. Rather than spending countless hours researching individual dividend stocks and analyzing their financial health, you can let professionally managed high income etfs handle the heavy lifting for you. These funds combine diversification with carefully vetted dividend-paying securities, making them ideal for those who want reliable income without excessive volatility.

When evaluating high income etfs, several factors matter: the yield they provide, the quality of underlying holdings, fee structure, and historical performance. The good news is that some funds have already done this screening work, offering you exposure to well-established income-generating assets at a reasonable cost.

Vanguard’s High Dividend Yield Fund: A Cornerstone for Income-Seeking Investors

The Vanguard High Dividend Yield Index Fund ETF (VYM) stands out as a premier choice for building reliable income streams. With a current yield of 2.4%, it significantly outpaces the broader market—more than double the S&P 500’s 1.1% average. This makes it particularly attractive for those prioritizing high income etfs in their allocation strategy.

What sets VYM apart is its commitment to low costs. The fund’s expense ratio of just 0.06% means you keep more of what you earn. On a $100,000 investment, you’d pay only $60 annually in fees, leaving your capital to compound.

The fund achieves broad market exposure through over 560 holdings spanning multiple sectors: financials, technology, healthcare, and industrials represent 61% of the portfolio. This diversification reduces single-stock risk while maintaining strong income potential. Blue-chip names like ExxonMobil, JPMorgan Chase, and Procter & Gamble anchor its top 10 holdings, offering both stability and credibility.

A key metric for risk-conscious investors is VYM’s beta of 0.76 over the past five years. This below-market volatility indicates the fund moves less dramatically than the overall market, protecting your principal during downturns. Over the past 12 months, VYM returned 12%, slightly trailing the S&P 500’s 13.8% but delivering superior stability—important for those prioritizing income over aggressive growth.

Invesco’s Pure Value Approach: Deep Value Screening for Dividend Collectors

For investors willing to accept a slightly higher fee in exchange for more selective value screening, the Invesco S&P 500 Pure Value ETF (RPV) offers compelling income potential. This fund yields 2.5% and focuses exclusively on deep value stocks—companies trading below their intrinsic value with lower downside risk.

RPV employs sophisticated scoring methodology to identify the market’s most undervalued income-producing assets. With just 123 holdings (compared to VYM’s 560+), RPV takes a more concentrated approach. Its largest position represents only 2%, ensuring no single holding dominates your exposure.

The fund weights heavily toward stable sectors: financials, healthcare, consumer staples, and materials collectively represent 64% of holdings. Technology exposure remains minimal at under 2%, emphasizing the fund’s defensive positioning. Notable holdings include Ford Motor Company, Humana, and Tyson Foods—established names with proven dividend histories.

RPV’s expense ratio of 0.35% is higher than VYM but justified by its active value-selection process. Over the past 12 months, RPV gained 15.5% (17.4% total return), demonstrating that focusing on value and income doesn’t mean sacrificing growth. For long-term investors committed to steady income generation, RPV provides a dependable wealth-building vehicle.

Comparing Your High Income ETFs: Which Fits Your Strategy?

The choice between these two high income etfs hinges on your priorities:

Choose VYM if you: prioritize maximum diversification and ultra-low fees, want S&P 500-aligned exposure with enhanced income, or prefer set-it-and-forget-it simplicity with minimal trading friction.

Choose RPV if you: appreciate value investing principles, can tolerate slightly higher fees for active stock screening, or seek more concentrated downside protection during market corrections.

Both funds address the core challenge: finding genuine income opportunities without assuming unnecessary risk. Where individual stock research might take months and still leave you vulnerable to company-specific problems, these funds compress that research into a single holding.

Building Your Income Foundation in Today’s Market

The appeal of high income etfs extends beyond mere yield. By removing the burden of individual security selection, you gain time to focus on broader portfolio strategy. Whether VYM’s diversified approach or RPV’s value-focused methodology aligns better with your goals depends on your risk tolerance and time commitment.

Historical perspective matters here too. Consider that investors who recognized Netflix’s potential in December 2004 and invested $1,000 saw that grow to $460,340. Similarly, Nvidia early believers from April 2005 watched $1,000 become $1,123,789. These examples underscore that disciplined investing—even through dividend-focused vehicles—has created generational wealth.

The most important step is beginning your high income etfs journey now, rather than perpetually searching for the “perfect” opportunity. Both VYM and RPV provide immediately actionable ways to generate recurring income while maintaining portfolio stability. Your consistent dividend stream awaits.