Schwab Dividend ETF (SCHD) surged 13.6% year-to-date on rotation from growth to its 100 value stocks.
Vanguard International Dividend ETF (VYMI) gained 39% over the past year as the dollar fell.
iShares Treasury ETF (TLT) surged from $90 to above $120 during the Great Recession as a recession hedge.
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We’re looking at a surge of retirees in the 2020s due to the Baby Boom’s peak in the 1960s, turning into a retirement boom today as these individuals come of age. If you are on the verge of retirement, dividend ETFs like Schwab US Dividend Equity ETF (NYSEARCA:SCHD), Vanguard International High Dividend Yield ETF (NASDAQ:VYMI), and iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) can be your entire strategy.
Five years from retirement is when you should stop caring about being clever and start being durable. You have a window where a perfectly reasonable plan can get wrecked by one ugly stretch in the market, and an uncomfortably large number of retirees are at risk.
For example, many investors are doubling down on the growth rally without even knowing the consequences. They’re buying S&P 500 and Nasdaq-100 ETFs for growth, and then buying covered call ETFs on both of the indexes for dividends. A stock market correction will be a disaster for their portfolios, and the capped upside of these covered call ETFs will make a recovery tough.
Here are three dividend ETFs that position your portfolio much better.
The Schwab US Dividend Equity ETF redeemed itself in a far quicker way than anyone would have imagined. SCHD barely delivered any capital gains from the 2022 to 2025 stretch, and while it did gain somewhat for those reinvesting the ETFs, the sideways trend made it look weak.
However, the stock has surged back in earnest and is up 13.6% year-to-date. The total return is even higher.
We’re not even two months into 2026.
The single biggest driver is what the market has been calling “the great rotation” out of growth and into value. Technology and the mega-cap AI darlings that dominated the last two years are struggling and are up just 0.5% year-to-date. When capital floods out of concentrated tech bets and into the broader value universe, an ETF like SCHD, which holds 100 top dividend-paying stocks screened for yield and dividend growth, catches a huge tailwind.
Obviously, I wouldn’t look at a 15% two-month gain and expect 90% in gains for the full year. What I do expect is that this EPS keeps up while paying you a 3.32% yield and an expense ratio of just 0.06%.
VYMI is a broad, ex-U.S. high dividend ETF, so you are buying international value and income, not a tech-led growth story. You likely have overlapping exposure to the same dozen or so growth stocks since most domestic ETFs have some level of exposure to them. VYMI gets you a unique roster of picks, diversifies your portfolio, and has been performing far better.
The fall of the dollar has helped VYMI surge 39% in just the past year. When the US dollar falls, unhedged foreign stocks translate back into more dollars, even if the local market is only doing fine.
A second driver was again the move out of growth stocks into dividend stocks, international stocks, and alternative assets like gold or silver. If the dollar stabilizes or snaps back, a good chunk of the easy “translation gain” can disappear, even if the underlying foreign markets keep grinding higher.
Also, with 40% plus in Financials, VYMI can look brilliant or boring depending on the rate and credit cycle overseas, so I would keep an eye on whether financials remain leadership or roll over.
I do think you’re going to be ahead of the market in the next five years if you hold this, since the U.S. has been going through a structural shift to reduce import dependence and increase manufacturing. A strong dollar would go against that.
You get a 3.26% dividend yield with a 0.17% expense ratio.
TLT owns long-term Treasuries, and the ETF has a history of gaining significantly during market downturns. These Treasuries are a beacon of stability for people who want a stable yield. This fund is basically a lever on long rates because its effective duration is about 15.47 years, and its weighted average maturity is about 25.9 years, so any short-term interest rate swings don’t have a big impact on the yield.
Where it does have an impact is the price. TLT gains when interest rates go down, especially during “shock” rate cuts during recessions. During the Great Recession, TLT surged from $90 to above $120 momentarily.
Thus, this is one of the only ETFs you can buy and be reassured that you have a true hedge against a recession. Equity ETFs are likely to go down no matter how safe the picks are, but TLT actually gains.
The best way to play this would be to employ a short put spread strategy as the ETF is trading sideways while still having a long position as a hedge.
TLT yields 4.32% with dividends paid monthly. The expense ratio is 0.15%.
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