The Best ETFs for Retirement: A Dividend Income Strategy

Building a reliable income stream during retirement doesn’t require picking individual stocks. Many investors find that the best ETFs for retirement combine steady dividend payouts with lower volatility, offering a simpler path to consistent cash flow without exposing themselves to the risks of single-security investments. Exchange-traded funds that focus on dividend-paying companies provide instant diversification—when one holding cuts its dividend, the impact on your overall portfolio remains minimal.

Why Choose Dividend-Focused ETFs for Your Retirement Plan?

When you invest in individual dividend stocks, you face concentrated risk. A single dividend cut or suspension can hurt both your income stream and the stock price itself. ETFs solve this problem by spreading your capital across dozens or even hundreds of dividend-paying companies. This diversification is one reason the best ETFs for retirement have become increasingly popular among income-focused investors.

The three ETF options worth examining all share common characteristics: they yield 2% or more, maintain low beta values (indicating stability compared to broader market swings), and hold some of the world’s most reliable dividend payers. Each offers a slightly different approach to dividend income, so your choice depends on your risk tolerance and income needs.

SCHD – The High-Yield Dividend Foundation

Schwab U.S. Dividend Equity ETF (ticker: SCHD) stands out for its generous 3.7% yield—more than triple the average S&P 500 stock. Operating with a minimal 0.06% expense ratio and averaging a beta below 0.7 over the past five years, this fund delivers attractive income without excess volatility.

What makes SCHD particularly suitable for retirement portfolios is its defensive positioning. Technology represents just 8% of holdings, while energy and consumer staples each comprise roughly 19%, grounding the fund in dividend-focused sectors. The portfolio holds 102 stocks with an average price-to-earnings multiple under 17, reflecting a value-oriented approach. For investors prioritizing income collection above growth, SCHD offers straightforward appeal.

DGRO – The Dividend Growth Trajectory

iShares Core Dividend Growth ETF (ticker: DGRO) takes a different angle, targeting companies with strong track records of raising their dividend payments. While its 2% yield sits modestly below SCHD, growth-oriented retirees often prefer this philosophy. As dividends increase over time, so does your retirement income—a meaningful advantage for long-term planning.

The fund’s 0.08% expense ratio remains competitive, and its 0.75 beta demonstrates similar stability to SCHD. DGRO’s portfolio spans approximately 400 companies, balancing established dividend names like Johnson & Johnson and ExxonMobil with dividend-growing tech firms including Apple and Microsoft. This blend delivers both stability and modernization, appealing to investors wanting diversification without excessive sector concentration.

NOBL – The Conservative Dividend Aristocrats Strategy

ProShares S&P 500 Dividend Aristocrats ETF (ticker: NOBL) focuses on companies demonstrating remarkable consistency: each holding has increased dividends for at least 25 consecutive years. At just over 2% yield and 0.77 beta, it delivers moderate income with considerable reliability.

The primary trade-off is a 0.35% expense ratio—higher than the other two, though still reasonable by industry standards. NOBL’s approach emphasizes stability and strength, deliberately excluding volatile sectors. Technology comprises merely 3% of its 69-stock portfolio, and individual holdings never exceed 2% of total assets, ensuring exceptional diversification. For truly risk-averse retirees, this concentrated focus on proven dividend growers offers peace of mind.

Comparing Your Best ETF Options for Retirement

The choice between these three depends on your priorities. SCHD appeals to current income maximization; its 3.7% yield generates immediate cash. DGRO attracts those preparing for rising retirement expenses; growing dividends offset inflation’s impact over decades. NOBL suits the most conservative investors; 25 years of consecutive dividend growth represents a time-tested track record.

All three maintain low expense ratios, reducing the drag on returns. All hold low betas, protecting against market downturns. Holding any as a retirement core position addresses the fundamental challenge of generating sustainable income without excessive risk—a central goal for most retirees evaluating the best ETFs for their portfolios.