High-yield dividend funds are an attractive way to invest. You get what can be a highly stable payout from a diversified collection of securities. The best high-yield exchange-traded funds (ETFs) can offer a growing payout year after year, making them a great way to generate passive income.
Here are some of the best high-yield ETFs for passive income, including their yield and costs.
Below are some of the best high-yield ETFs that you may want to consider for your portfolio.
|
Fund (Symbol) |
Yield |
Expense Ratio |
|---|---|---|
|
SPDR Portfolio High Yield Bond ETF (SPHY) |
7.7 percent |
0.05 percent |
|
Global X MLP ETF (MLPA) |
7.5 percent |
0.45 percent |
|
SPDR Bloomberg Short Term High Yield Bond ETF (SJNK) |
7.4 percent |
0.40 percent |
|
iShares High Yield Systematic Bond ETF (HYDB) |
7.0 percent |
0.35 percent |
|
Fidelity Enhanced High Yield ETF (FDHY) |
6.7 percent |
0.35 percent |
|
iShares iBonds 2025 Term High Yield & Income ETF (IBHE) |
6.3 percent |
0.35 percent |
|
iShares Fallen Angels USD Bond ETF (FALN) |
6.3 percent |
0.25 percent |
|
Source: Morningstar.com. Data as of June 9, 2025 |
The funds mentioned above include those that meet the following criteria:
-
A distribution of at least 6 percent
-
An expense ratio lower than 0.5 percent
-
Positive total return over the last three years
Owning a high-yield dividend ETF can be attractive if you’re looking to generate passive income. It doesn’t get any easier than waking up to find a dividend in your account. But you still need to know what you’re investing in and how it all works.
A high-yield ETF invests only in securities that pay distributions, but depending on the kind of fund, it may invest in stocks, bonds or even preferred stock to generate income. The fund’s strategy will list the types of securities that it invests in and the general approach it takes.
Once you select a fund, the investments in it will generally follow that specific approach. For example, if you buy a high-yield bond ETF, the investments will be bonds, and the fund’s price will respond as if it were a bond (i.e., rising when prevailing interest rates fall and vice versa).
Some funds may invest in all asset classes (stocks, bonds, preferred stocks, etc.), while others are more selective. Some strategies are limited to specific industries, while others may take a broadly diversified approach, buying across industries, company sizes and so on.
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If you look only at a fund’s high yield, you may be tempted to buy on that factor alone, especially compared to the yield on a savings account or CD, even the highest-yield accounts. But you need to consider a variety of things before buying any ETF.
