Potential investors should be aware the tax consequences as well. Dividends are passed through to ETF investors and may be taxed as qualified and ordinary income. The providers will publish the percentage of dividends paid that were qualified at the end of the year. ETFs that rebalance semi-annually or annually will lower the chance of non-qualified dividends.

“My premise is that, when the Fed does decide to raise rates, it will be because the US economy has gotten consistently stronger. While raising rates might be a negative for dividend funds, the companies that make up the funds should be performing better than ever under a stronger US economy. Therefore, I expect the earnings and dividend payouts of these firms to rise, providing an overall net gain for the fund,” according to a Seeking Alpha analysis of VYM.

VYM charges just 0.09% per year, making it less expensive than 92% of comparable funds.

Vanguard High Dividend Yield ETF