One Of The Highest Quality Dividend ETFs For 2026
Outperform the S&P 500 with this ETF that offers a low risk way to collect a growing stream of passive income.
There is a massive misconception in the investing world.
People think you have to choose: Growth OR Income.
You want Growth? Buy Amazon AMZN 0.00%↑ and accept 0% yield.
You want Income? Buy a dusty old utility stock like Verizon VZ 0.00%↑ and accept 0% growth.
But what if you didn’t have to choose?
For the last year, I’ve been tracking an ETF that breaks all the rules of traditional dividend investing. It doesn’t just buy slow-growth companies. It actively targets the cash-rich giants of the AI revolution.
👉 As we can see below, this dividend ETF has outperformed the S&P 500 over the last five years.
If you are looking for a “low-risk” way to play the tech boom while still collecting a reliable paycheck, this might be the most efficient ticker in the market right now.
The Problem With “Traditional” Dividend ETFs
To understand why this specific fund is so special, you first have to look at its competition.
Most popular dividend ETFs (like the Dividend Aristocrats) operate under strict, outdated rules. They often require companies to have raised their dividends for 10, 20, or even 25 years in a row before they can even be considered for the portfolio.
The Good News: You get incredibly stable companies.
The Bad News: You completely miss out on the modern economy.
Think about it—companies like Apple AAPL 0.00%↑ and Nvidia NVDA 0.00%↑haven’t been paying dividends for 25 years, so they get automatically excluded from these traditional lists. As a result, many investors end up owning a portfolio heavy on tobacco, oil, and legacy utility companies that barely move.
This ETF takes a different approach. It has no arbitrary “age requirement” for its dividends. Instead, it simply scans for cash-rich companies that are paying healthy dividends right now. This flexibility allows it to bypass the old rules and own the best growth stocks in the world while they are still in their prime.
Dividend Growth
One of the best aspects of this fund is the dividend growth. Invest today, collect income, and watch that income grow over time.
As we can see below, this ETF has been able to provide an annual dividend raise of 10.42% over the last five years.
That’s an average double-digit growth rate for five consecutive years straight. When was the last time your job gave you that kind of raise?
What Makes This ETF Special - Tech Exposure
The breakdown of this fund is fascinating. While most high-yield funds are heavy on Financials and Energy, this fund allocates roughly 26% of its portfolio to Information Technology.
The fund I am referring to is the :
👉 Fidelity High Dividend ETF FDVV 0.00%↑
By ignoring arbitrary “dividend history” rules, FDVV is able to hold massive positions in the companies driving the AI revolution.
Nvidia NVDA 0.00%↑: Currently the largest holding at ~6.68%.
Microsoft MSFT 0.00%↑: A core pillar of the fund.
Apple (AAPL) & Broadcom AVGO 0.00%↑: Heavyweight tech positions.
This means when AI rallies, FDVV rallies. But unlike a pure tech fund, you are protected by a diversified basket of ~107 holdings across other sectors like Financials and Consumer Staples.
With the projected growth of the AI sector over the next decade, this means that FDVV is aligned to participate in this growth.
It is a “Have Your Cake and Eat It Too” scenario: You get the safety of a diversified dividend fund, with the upside engine of a tech ETF.
The Numbers: Why It Beats the Competition
The strategy isn’t just a nice story—it shows up in the returns. Because of this “Tech Tilt,” FDVV has consistently outperformed many of the popular peer dividend ETFs (like SCHD or SDY) over the last year.
Yield: ~3.0% (Paid Quarterly)
Expense Ratio: 0.15% (Extremely cheap)
1-Year Return: ~14.5% (with dividends reinvested)
As we can see below, FDVV has outperformed many notable dividend ETF peers, including:
To put that in perspective: If you invested $10,000 in 2016 and just let it ride, your annual dividend income would have roughly doubled by today, while outperforming the growth of these other ETFs—without you adding a single penny of fresh capital. That is the power of “Dividend Growth” over simple “High Yield.”
The Risks (Yes, There Are Some)
No investment is risk-free. Because FDVV relies on that 26% Tech allocation to drive growth, it is more sensitive to market sentiment than a boring utility fund.
Sentiment Shifts: If the market suddenly decides “AI is a bubble,” FDVV will feel the pain more than a defensive fund like VYM.
Interest Rates: The fund also has exposure to Real Estate and Financials, sectors that can be sensitive to interest rate changes.
However, for a long-term investor, I view these risks as minimal compared to the risk of owning a portfolio that doesn’t grow.
The Verdict: A “Low-Risk” Way to Buy AI
I view FDVV as a foundational block for a modern portfolio.
It solves the biggest headache for retirees and income investors:
How do I get exposure to AI without gambling my life savings?
FDVV gives you that exposure through the “back door.” You aren’t buying speculative startups; you are buying the most profitable, cash-generating companies on earth (Nvidia, Microsoft, JPMorgan), all wrapped in a low-cost, diversified package.
You get the 3% yield.
You get the double-digit dividend growth.
You get the AI upside.
For 2026 and beyond, this is one of the smartest ways to stay invested.