Key Points
- ETFs that pay competitive dividends are not often associated with strong returns, but three funds offer a combination of both benefits.
- VEA and EFA take similar approaches, focusing on non-U.S. developed markets, and have each outperformed the S&P 500's returns this year.
- SPYV, by contrast, focuses on large-cap U.S. value stocks and has had a slower year, but it is building momentum and providing a nice dividend bonus.
Dividend stocks are not traditionally known for their share price rallies. Companies making distributions to stockholders tend to be stable and well-established, with their biggest growth days long in the past. Similarly, exchange-traded funds (ETFs) that hold baskets of dividend stocks tend to provide investors with a healthy passive income stream simply for owning shares rather than capital appreciation.
Occasionally, though, investors can find the best of both worlds.
Vanguard FTSE Developed Markets ETF (NYSEARCA: VEA), iShares MSCI EAFE ETF (NYSEARCA: EFA), and SPDR S&P 500 Value ETF (NYSEARCA: SPYV) are three ETFs that pay noteworthy dividends and deliver notable capital appreciation. While not the highest of any ETF making distributions, the dividends are still enough to provide a compelling perk for shareholders—especially considering these ETFs are trading at or near year-to-date (YTD) highs after experiencing sizable rallies.
VEA: Rides Global Market Surge With a Competitive Yield
VEA capitalizes on the strong performance of many international equity markets in 2025, some of which have outpaced the S&P 500's already robust 15% returns YTD.
The fund can be a long-term investment option for investors seeking access to non-U.S. equities. Like many other broad-based Vanguard ETFs, it boasts a highly competitive expense ratio—just 0.03% per year.
Comprised of nearly 4,000 total stocks, VEA offers a highly diversified group of stocks at a low cost.
The fund's geographic and stock mandates are expansive, as it holds companies across the market capitalization spectrum from Canada, Europe, and parts of the Pacific, with European stocks comprising 52% of its holdings. Japan is the single largest country by portfolio allocation, accounting for approximately 21% of the portfolio.
VEA pays out a dividend yield of 2.74%, which is quite high for a fund that doesn't specifically employ a dividend strategy. On top of that, the fund has rallied by close to 29% YTD, or about twice the return rate of the broader U.S. market during that period.
EFA: Large-Cap International Focus With Strong 2025 Returns
Utilizing a similar approach to VEA, EFA distinguishes itself with its large-cap focus. Both funds are sizable and trade very actively, although EFA's trading volume tends to be higher than VEA's, making it a prime choice for traders looking to move in and out of positions more frequently.
EFA's basket of stocks is not as extensive as VEA's, but with nearly 1,000 holdings, it still offers exceptional diversification. While the portfolio focuses on European names, Japanese stocks represent the largest portion of the portfolio, at approximately 22%. The fund also invests in a smaller percentage of Australian equities, which may appeal to investors seeking a specific geographic tilt.
Where EFA falls short a bit is in its annual fee, which is substantially higher at 0.32%. Still, with an annual dividend yield of 2.7% and YTD returns of nearly 29%, there are plenty of benefits to considering this fund nonetheless.
SPYV: Combines U.S. Value Investing and Income Potential
The SPYV adopts a different approach from the two above. Besides its exclusive focus on U.S. equities, SPYV also narrows the search further by tracking large-cap stocks with value characteristics such as price-to-earnings and price-to-sales ratios.
Although its portfolio comprises nearly 400 positions, SPYV prioritizes three major companies: Apple Inc. (NASDAQ: AAPL), Microsoft Corp. (NASDAQ: MSFT), and Amazon.com Inc. (NASDAQ: AMZN) collectively represent approximately 20% of invested assets.
At 1.83%, SPYV's dividend yield is slightly lower than that of the funds above, but it is still a nice bonus for investors interested in a value play. SPYV's momentum has been accelerating after an early-2025 dip, and the fund is up about 13% YTD.
With an annual fee of 0.04%, SPYV may be a good buy-and-hold option for investors looking to capture undervalued stocks across sectors, with a bit of a passive income benefit thrown in for good measure.
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Companies Mentioned in This Article:| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Vanguard FTSE Developed Markets ETF (VEA) | $60.96 | -0.6% | 2.76% | 16.34 | Hold | $61.10 |
| Amazon.com (AMZN) | $229.75 | -2.1% | 0.09% | 34.96 | Buy | $294.15 |
| Apple (AAPL) | $267.95 | -1.6% | 0.39% | 40.63 | Moderate Buy | $278.22 |
| iShares MSCI EAFE ETF (EFA) | $94.61 | -0.7% | 2.72% | 16.48 | N/A | N/A |
| Microsoft (MSFT) | $506.99 | -0.6% | 0.72% | 36.07 | Buy | $633.59 |
| SPDR Portfolio S&P 500 Value ETF (SPYV) | $55.99 | -0.3% | 1.84% | 20.50 | Moderate Buy | $56.00 |
About Nathan Reiff
Experience
Nathan Reiff has been a contributing writer for DividendStocks.com since 2024.
- Professional Background: Nathan Reiff is a financial writer and analyst with more than a decade of experience investing and studying the markets through self-guided learning and educational resources from DividendStocks.com and beyond. He began his career in the SEO and cryptocurrency sectors before expanding into general finance and equity research as his interest in investing deepened.
- Credentials: He holds a Bachelor of Arts and Doctor of Musical Arts from Yale University and a Master of Music from the University of Michigan.
- Finance Experience: Nathan has been a contributing writer for DividendStocks.com since 2024. He is also a long-time contributor to Investopedia and Decrypt, where he has written extensively on topics including ETFs, cryptocurrencies, technology, real estate, alternative energy, and consumer staples.
- Writing Focus: He specializes in fundamental analysis, dividend stocks, ETFs, and emerging financial trends. His work bridges traditional markets with digital innovation, helping readers navigate everything from blockchain to blue-chip equities.
- Investment Approach: Nathan follows a long-term, fundamentals-first investing philosophy, emphasizing macroeconomic context, company performance, and sector dynamics.
- Inspiration: Nathan has learned a tremendous amount about the stock market from financial writers and educational resources and is eager to help inspire a new generation of investors through his writing.
- Fun Fact: He’s an avid cook and baker who brings the same creativity and precision to the kitchen that he does to financial analysis.
- Areas of Expertise: Fundamental analysis, ETFs, technology, retail, consumer staples, dividends, cryptocurrencies
Education
Doctor of Musical Arts, Yale University, New Haven, Connecticut; Bachelor of Arts, Yale University, New Haven, Connecticut; Master of Music, University of Michigan, Ann Arbor, Michigan