Investors See Dividends Boost Wealth Over Time

NEW YORK, NY — Understanding total return is essential for investors looking to maximize their earnings. Total return includes both price appreciation and reinvested dividends, revealing how much an investment truly earns over time.

Consider two investors who purchased the SPDR S&P 500 ETF Trust between January 2023 and April 2025. One investor reinvested dividends while the other did not. By the end of the period, the investor who reinvested earned an annualized return of 10.12% before taxes and fees, compared to the 8.14% return of the investor who did not reinvest.

Though the difference might seem small, the impact over thirty years is significant. The investor who reinvested would have turned $10,000 into $223,690, while the other would have only reached $124,424. This illustrates the power of reinvesting dividends.

Dividend growth investing can become snowballing over time. Each dividend payment helps buy more shares, which then generate more dividends. Additionally, companies increasing their dividend payouts signal strong fundamentals.

Dividend growth ETFs are designed to target such companies with solid dividend-hiking histories. These funds allow investors to build portfolios around this strategy effectively.

There are various approaches within dividend investing, including high-yield dividend strategies and dividend-quality strategies, which emphasize the sustainability of payments rather than just the amount.

Dividend growth ETFs focus primarily on companies with a track record of raising dividends. Some ETFs may screen for companies that have increased dividends for a certain number of consecutive years. Others look for companies positioned to increase payouts based on their fundamentals.

Investors interested in dividend growth ETFs can choose from several notable options. For instance, the Vanguard Dividend Appreciation ETF (VIG) boasts a low expense ratio of 0.05%, targeting companies that have increased dividends for at least ten consecutive years.

iShares Core Dividend Growth ETF (DGRO) requires companies to have five years of consecutive dividend growth, while the S&P 500 Dividend Aristocrats ETF (NOBL) focuses exclusively on companies that have raised dividends for at least 25 years.

SPDR S&P Dividend ETF (SDY) also targets firms with at least twenty years of dividend increases and ranks stocks by yield. Finally, Schwab U.S. Dividend Equity ETF (SCHD) blends dividend growth characteristics with quality metrics.

As of May 6, each of these ETFs presents unique features for investors committed to dividend growth. Selecting the right ETF can lead to substantial investment returns over the long haul.