Want Decades of Passive Income? Start With This 1 Magnificent ETF.

Look at the iShares Core Dividend Growth ETF (DGRO +0.27%) and the first number you'll likely see isn't that impressive.

Its current dividend yield is 2.1%, roughly double that of the S&P 500 (^GSPC -0.51%), but also well below that of more popular funds, such as the Schwab U.S. Dividend Equity ETF (SCHD +0.34%). And certainly well below what you'll find in the fixed-income exchange-traded fund (ETF) universe.

It may not be a good candidate for someone looking for high income. But that misses the purpose of the portfolio. Its focus on dividend growth and balance sheet quality makes it ideal for someone looking to build a well-rounded dividend portfolio.

It's tempting to just buy a series of high-yield equity ETFs and capture the larger dividend checks. If you do that, however, you're creating portfolio vulnerabilities

The iShares Core Dividend Growth ETF doesn't consider a stock's yield at all. Qualifying companies must have raised their dividend for at least five straight years and have a payout ratio of less than 75%. The highest-yielding 10% of dividend stocks are also automatically eliminated from consideration and help to improve overall portfolio quality.

One unique aspect of the fund is its weighting method. It allocates according to total dividend dollars paid, not market cap or yield. In other words, the companies that pay out the most dividends get larger weights in the index. That gives it a natural tilt toward large caps over smaller companies, but it's a dividend-focused metric that works for this type of fund.

NYSEMKT · As of 4:00 PM ET 11/02/26

The iShares Core Dividend Growth ETF launched in June 2014. Since then, it's increased its total annual dividend paid every year. That's exactly the kind of track record you want to see in a dividend growth ETF. Over the past decade, it's grown its dividend by nearly 9% a year. So these aren't just minor dividend increases. They're fairly sizable ones that do a great job of staying ahead of inflation and improving real dividend income.

It's also delivered on total return. Since inception, it's returned almost 13% per year and carries a four-star rating from Morningstar.

The 2.1% yield won't be the income driver of your portfolio. But its focus on dividend growth and quality makes it a great complement to a high-yield ETF. Its track record of annual dividend increases makes it very attractive to income seekers and really anyone looking to add a quality fund to their portfolio.