Want expert insights on REITs and BDCs? Join Colorado Wealth Management Fund’s email list—widely regarded as the top REIT analyst on Seeking Alpha. Stay ahead of the market with exclusive updates! [Sign Up Now]

Why Dividend ETFs Still Rule

The market keeps evolving, but one thing hasn’t changed: dividends matter. Retirees and near-retirees want reliable income, and younger investors want compounding. The good news is that 2025 has no shortage of options. The best strategy? Build a core retirement plan around a select group of dividend ETFs, while complementing with preferred shares for yield stability.

I’ve written about the “Top 5 Dividend ETFs for 2025” before, but today I’m going a step further: showing how they can actually form the foundation of a retirement plan.

The Core 5 Dividend ETFs

Let’s get right into the list. These five dividend ETFs give you diversification, income, and a practical framework for retirement portfolios. They aren’t just “top tickers” - they each fill a specific role.

• (SCHD) (Schwab U.S. Dividend Equity ETF)
  Known for its quality screen. Focuses on companies with strong records of paying and growing dividends. It’s the backbone for many income investors.
• (VYM) (Vanguard High Dividend Yield ETF)
  Broad, simple exposure to higher-yielding U.S. companies. It’s cheap, liquid, and an anchor for investors who don’t want to stock-pick.
• (DGRO) (iShares Core Dividend Growth ETF)
  Pairs income with growth. This ETF emphasizes companies growing their dividends consistently — the kind of compounding retirees need.
• (HDV) (iShares Core High Dividend ETF)
  Offers exposure tilted toward “defensive” sectors like healthcare and energy. It may lag in bull markets, but shines in tougher conditions.
• (VIG) (Vanguard Dividend Appreciation ETF)
  Tt focuses on companies with a long history of increasing dividends.

Together, these five aren’t just a list - they create a balanced dividend portfolio. Growth, defense, yield, and diversification all in one basket.

Why Preferred Shares Belong in the Mix

Dividend ETFs are great, but if you want consistent income without the wild swings of common stocks, you need to at least consider preferred shares.

Preferreds sit between bonds and common equity. They usually pay higher yields than bonds, and the dividends are often qualified for tax purposes. At The REIT Forum, we’ve shown how preferreds from quality issuers can deliver stable, long-term income with less price volatility than common shares.

Adding even a 15–25% allocation to preferreds alongside your dividend ETFs can reduce risk and smooth out your retirement income stream. It’s one of the most overlooked income strategies today.

Retirement Math: How It Comes Together

Here’s the way I think about it:

• Dividend ETFs can deliver ~3–4% yields on average, with growth.
• Preferred shares often deliver 6–9%+ yields, with relative stability.

Combine them in a 75/25 mix and you’re looking at blended income that’s both sustainable and resilient. That’s how retirees can cover living expenses without selling down the portfolio in every downturn.

Why This Works in 2025

The big fear right now? Markets are expensive, the Fed is unpredictable, and investors worry about sequence-of-returns risk.

That’s exactly why this approach works.

• You’re diversified across high-quality dividend stocks.
• You’re enhancing yield with preferreds.
• You’re not chasing risky high-yield junk.
• And you’ve got a plan that holds up even if markets chop sideways.

Final Thoughts

Retirement isn’t about hitting home runs. It’s about building a reliable system that generates cash flow year after year.

The five ETFs above form the dividend foundation. Add in preferred shares for yield stability. Keep your costs low, reinvest when you can, and you’ve got a strategy that works whether you’re five years from retirement or already living off portfolio income.

This is exactly the type of strategy we break down daily at The REIT Forum — because planning for retirement doesn’t have to be complicated. It has to be consistent.

Join The REIT Forum by Colorado Wealth Management Fund, trusted by over 60,000 investors for expert analysis on REITs, BDCs, and preferred shares. 

This article was compiled by my assistant. If there are any mistakes, blame him - I certainly will.

Disclosure: I may frequently trade in the preferred shares of any mortgage REIT and occasionally in the common shares.