3 Dividend ETFs That Make It Easy To Grow Your Passive Income
I spent years picking individual stocks to build my income. Here is the simple 3-ETF strategy I would use if I started today.
Every month, I get notifications on my phone confirming deposits into my brokerage account. I didn’t trade my time for this money. It is passive income generated by dividends. Dividends are portions of a company’s profits that are paid out to you as an investor. In 2019, I started this process of building dividends and it has continued to snowball since then. Here are the annual dividend amounts I’ve collected over the years:
2019: $254 in dividends.
2020: $1,632 in dividends.
2021: $3,001 in dividends.
2022: $5,306 in dividends.
2023: $11,249 in dividends.
2024: $18,866 in dividends.
I am set to collect ~$41K in 2026 due to some shifts in my portfolio recently. I will publish an updated portfolio report in March so make sure you’re subscribed to keep up with that!
Seeing that income grow is motivating, but let’s be honest: I spent hundreds of hours analyzing balance sheets to pick those individual winners. Most people don’t have that kind of time. And the good news is, you don’t have to do it the hard way.
You can build a robust, growing passive income stream simply by choosing the right Exchange Traded Funds (ETFs). ETFs allow you to buy a basket of high-quality companies in a single trade. So buying one ETF can instantly provide you diversity across hundreds of companies, making it one of the lowest risk ways to invest.
If you want to simplify your income strategy, here are three ETFs that make it easy to grow your passive income. #3 on this list has actually outperformed the S&P 500 over the last twelve months, while offering a dividend yield above 6%.
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1. Schwab U.S. Dividend Equity ETF SCHD 0.00%↑
If you are looking for the intersection of a high starting yield and strong dividend growth, SCHD is often considered the gold standard. Here are some quick facts of the fund:
Dividend Yield: 3.5%
$10,000 invested = $350 in annual dividend income.
101 different holdings
Expense Ratio: 0.06%
Fund was created in 2011
SCHD tracks the Dow Jones U.S. Dividend 100 Index. It doesn’t just look for the highest yields; it looks for quality. To be included, a company must have a 10-year history of paying dividends and strong fundamental metrics relative to its peers, such as cash flow to debt and return on equity.
This filtering process means SCHD holds companies that can afford their dividends, rather than “yield traps” that are about to cut their payouts. By investing in SCHD, you are getting exposure to companies that offer essential services and products.
Why it works for passive income: SCHD provides a higher-than-average yield right now, along with a history of aggressive dividend growth. It is a “set it and forget it” foundational holding for income investors.
The best part about SCHD is that it provides dividend raises annually. Looking at the table below, we can see that SCHD has averaged an annual raise of 10.61% over the last ten years. Can you imagine receiving a raise of 10.6% every year from your job? This sort of concept means that your annual dividend income will grow every year, even if you never invest more money in the fund.
2. Vanguard Dividend Appreciation ETF VIG 0.00%↑
While SCHD focuses on a mix of yield and quality slow-growing companies, Vanguard’s VIG is focused almost entirely on future growth.
Dividend Yield: 1.6%
$10,000 invested = $160 in annual dividends
347 different holdings.
Expense Ratio: 0.04%
Fund was created in 2006.
VIG tracks the S&P U.S. Dividend Growers Index. The primary requirement for inclusion in this fund is that a company must have increased its dividend payments for at least 10 consecutive years. Lucky, there are many high quality growth companies that align with this focus. Therefore, an investment in VIG means you are getting exposure to companies like Apple AAPL 0.00%↑, Microsoft MSFT 0.00%↑, JPMorgan JPM 0.00%↑, Walmart WMT 0.00%↑, Visa V 0.00%↑, and Broadcom AVGO 0.00%↑, just to name a few.
Because it focuses on dividend growth rather than current yield, VIG’s starting yield is usually lower than SCHD’s. However, the companies held in VIG (like Microsoft and Apple) are often growing their payouts faster.
Why it works for passive income: You buy VIG not for the income it pays today, but for the income it will pay in five or ten years. It ensures your passive income stream keeps up with inflation.
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✅ The Dividend Blueprint (ebook)
A step-by-step guide showing how I structure my portfolio, grow monthly cash flow, and reinvest for long-term income.✅ Monthly Dividend Map
50+ hand-picked tickers that pay monthly so you can ladder your income all year long.✅ Dividend Tracker (Google Sheet)
The exact spreadsheet I use to track yield, forward income, reinvestment, and portfolio growth.✅ Dividend Growth Legends: 50+ Stocks
50 stocks that have an established history of dividend increases.✅ List of ETFs for Beginners To Start With
3. The Income Booster: Amplify CWP Enhanced Dividend Income ETF DIVO 0.00%↑
SCHD and VIG are passive index funds. DIVO is different. It is an actively managed ETF designed to generate high current income.
Dividend Yield: 6.2%
$10,000 invested = $620 in annual dividend income.
35 different holdings.
Expense Ratio: 0.56%
Fund was created in 2016.
DIVO holds a portfolio of roughly 25 to 35 high-quality large-cap dividend stocks at any time, similar to what you might find in the top holdings of SCHD or VIG.
However, DIVO enhances its yield by strategically selling covered call options on individual stocks within its portfolio. Selling these options generates immediate cash premiums, which DIVO passes on to investors in the form of monthly distributions.
Why it works for passive income: DIVO utilizes an income-generating strategy that is difficult for average investors to manage themselves. It provides a high monthly income stream, making it useful for investors who want more immediate cash flow from their portfolio.
For reference, all of these funds have provided attractive returns over the last decade. All of these ETFs would have essentially tripled your cash over the last ten years, while also providing you with a growing stream of dividend income over time. The process of growing your wealth doesn’t have to be complicated. By buying shares of ETFs like these every month, you can passively grow your wealth with very little effort. These ETFs provide instant diversification and makes the whole process very low stress.
Summary: The Simple Path to Wealth
All three of these funds have provided attractive returns over the last decade.
SCHD for high yield + growth.
VIG for long-term compounding.
DIVO for immediate monthly income.
The process of growing your wealth doesn’t have to be complicated. By buying shares of ETFs like these every month, you can passively grow your income stream with very little stress.
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