But which dividend ETFs might be smart plays going forward, and how can you pick among them? There are now around 160 U.S.-listed ETFs with a dividend focus, notes Neena Mishra, director of ETF research for Zacks Investment Research in Chicago. Like any other market niche, you have to be smart about where you pick your spots. A few tips:
Look for dividend growth, not just yield.
By focusing on companies that are actively growing their dividends, you can load up on firms whose cash flow and balance sheets are trending in a positive direction.
One that gets lots of plaudits is the Vanguard Dividend Appreciation ETF (VIG). This fund—gold-rated by Morningstar—might not at first jump out for income-seekers since its average yield of around 2 percent is not that different from the broader S&P 500.
But growing dividends equates to giving yourself regular raises. Top holdings include reliable names like Microsoft Corp., Johnson & Johnson, PepsiCo Inc. and 3M Co. Perhaps best of all for fee-minded investors, its expense ratio is a negligible .08 percent.
Avoid rate-sensitive stocks.
Another winner is the iShares Core Dividend Growth ETF (DGRO), advises Zacks' Mishra. This ETF is thoughtful about sectoral makeup, and not being too exposed to industries that are likely to tank along with higher interest rates.
For instance, it is 18 percent comprised of information technology companies—which should be able to weather rate hikes just fine—and only 4 percent exposed to utilities. Not only does Mishra point out it is "really cheap," with a .09 percent expense ratio, but it seems to be on a performance roll, clobbering its benchmarks year-to-date by almost 4 percentage points.
Go global.
Average yields often tend to be higher in stock markets around the world. So for some international flavor, check out iShares Edge MSCI Minimum Volatility EAFE ETF (EFAV). While dividends may not be explicitly broadcast in the fund's name, it does boast an average yield of almost 4 percent.