Dividend ETFs Outperform Tech Giants In 2026 Rally

For many new investors, the stock market can feel like a maze—full of twists, turns, and the nagging sense that one wrong step could cost you. But there’s a tool that’s been gaining traction for those seeking both simplicity and steady returns: dividend exchange-traded funds (ETFs). As the market continues to broaden in 2026, dividend ETFs are not just holding their own—they’re outshining some of the biggest tech names, offering a compelling blend of income and growth.

According to Seeking Alpha, the Schwab U.S. Dividend Equity ETF (SCHD) has become a cornerstone for many portfolios. It’s easy to see why. SCHD invests in high-quality companies recognized for their financial strength and a consistent track record of paying dividends. As of February 3, 2026, SCHD boasts a yield of about 4% and a five-year return of over 35%. That’s not all—its net assets total a hefty $71.64 billion, and its expense ratio sits at a rock-bottom 0.06%. For investors wary of high fees, that’s music to the ears.

But SCHD isn’t the only game in town. The Vanguard High Dividend Yield ETF (VYM) is another heavy hitter, investing in nearly 600 stocks across 10 sectors. VYM’s approach is to screen for companies projected to pay higher-than-average yields, giving investors a meaningful income stream. The fund’s yield is about 2.44%, and over the past five years, it’s delivered an eye-popping 64% return. With net assets of $84.52 billion and an equally low expense ratio of 0.06%, VYM offers both breadth and value for those looking to diversify.

Meanwhile, the SPDR S&P Dividend ETF (SDY) focuses on a special breed of stocks known as the Dividend Aristocrats—companies that have increased their dividends for at least 20 consecutive years. That’s a level of consistency many investors dream of. SDY offers a yield of about 2.61% and a five-year return of approximately 40%. Its net assets total $19.88 billion, and its expense ratio is 0.35%. While that fee is higher than SCHD or VYM, the stability and steady income SDY provides are hard to overlook.

For those who value companies with a habit of raising dividends year after year, the Vanguard Dividend Appreciation ETF (VIG) is a logical choice. VIG’s main holdings are in information technology, financials, and healthcare, and it’s diversified across more than 300 stocks. The fund’s yield is about 1.62%, but its five-year return is a robust 60%. Plus, its expense ratio is an ultra-low 0.05%, making it one of the most cost-effective options out there.

Some investors, however, are on the hunt for even higher income. Enter the JPMorgan Equity Premium Income ETF (JEPI). This fund takes a two-pronged approach: it invests in large-cap S&P 500 stocks and sells options to generate additional income. JEPI screens for stocks with low volatility and uses proprietary research to find the best risk/return profiles. The result? A yield above 8%, which is among the highest in the dividend ETF landscape. Although its five-year return of around 5.21% is more modest, the fund’s net assets stand at $41.49 billion, and it carries an expense ratio of 0.35%. JEPI is heavily invested in the information technology sector, which has been riding the artificial intelligence (AI) wave, and it’s earned the Morningstar Silver Medalist rating—a nod to its quality and management.

But what’s driving the recent surge in dividend ETF performance? According to Barron’s, the answer lies in a broadening market rally. Dividend-paying stocks like Exxon Mobil, Walmart, Ford, and Coca-Cola are outperforming tech giants such as Nvidia. As Barron’s put it, “dividend-paying stocks are crushing it compared to tech darlings.” This shift is a sign that investors are seeking stability and reliable income amid uncertainty, rather than chasing the next big thing in technology. It’s a subtle but significant change in market sentiment, and one that’s benefiting those who have embraced dividend ETFs.

Of course, not all dividend ETF strategies are created equal. Some funds, like SCHD and VYM, emphasize diversification and low fees. Others, such as SDY and VIG, focus on companies with stellar dividend growth records. Then there’s JEPI, which takes a more active approach by blending stock selection with options strategies. The common thread? Each offers a way to tap into the power of dividends without the stress of picking individual stocks—something that’s especially appealing for beginners or those with limited time to manage their portfolios.

For those considering building a dividend-focused portfolio, the choices can feel overwhelming. In a recent Seeking Alpha article published on February 2, 2026, one analyst discussed constructing a $75,000 dividend portfolio anchored by SCHD and other top picks for the year. The author disclosed long positions in SCHD and a range of other stocks and ETFs, underscoring the confidence many investors have in these funds. While the article didn’t provide new performance data beyond endorsement, the message was clear: dividend ETFs remain a popular and trusted vehicle for those seeking both income and growth.

It’s important, however, to remember the standard disclaimers. As Seeking Alpha notes, “Past performance is no guarantee of future results.” Every investor’s situation is unique, and what works for one may not be ideal for another. The platform also makes it clear that its authors, whether professional or individual investors, may not be licensed or certified by any regulatory body. So, while the enthusiasm for dividend ETFs is palpable, investors should always do their own homework and consider their risk tolerance and financial goals before diving in.

One of the biggest draws of dividend ETFs is their ability to offer instant diversification. By holding a basket of stocks across multiple sectors—energy, consumer staples, healthcare, technology, and more—these funds can help smooth out the bumps when certain industries hit rough patches. Defensive sectors like consumer staples and healthcare, for example, tend to perform well in various market conditions, providing a layer of stability that can be invaluable during periods of volatility.

Expense ratios are another key consideration. Lower fees mean more of your returns stay in your pocket. Funds like VIG, SCHD, and VYM have set the bar with expense ratios as low as 0.05% to 0.06%. Over time, those savings can really add up, especially for long-term investors.

As dividend ETFs continue to gain traction and outperform some of the market’s flashiest names, the message seems clear: you don’t need to be a stock-picking wizard to build a resilient, income-generating portfolio. Whether you’re just starting out or looking to add a layer of stability to your investments, these funds offer a compelling path forward—one that’s backed by professional management, broad diversification, and a track record of delivering results when it matters most.