As of 2015, the top three dividend-paying exchange-traded funds are ProShares S&P 500 Aristocrats ETF, WisdomTree Dividend ex-Financials Fund and Schwab US Dividend Equity ETF, according to U.S. News and World Report. The criteria for evaluating funds are longevity, size and how well they fit a traditional asset allocation plan.Continue Reading
Exchange-trade funds are securities that own assets, such as stocks, commodities or indexes, explains Investopedia. They may be a corporation or an investment trust, and they are traded like stocks on a stock exchange. The ETF rankings identify funds that pay reliable dividends, providing long-term passive income and a cushion during economic slumps, claims U.S. News and World Report. The rankings include funds that have at least $100 million in assets and have been trading for a year or more. They don't include funds that are actively managed or that use leveraged or inverse strategies, which are better for experienced traders seeking quick growth.
Four factors contribute to the funds' overall score: expense ratio, tracking error, bid/ask ratio and diversification, states U.S. News and World Report. The first two factors are weighted at 30 percent each, and the last two are weighted at 20 percent each. The rankings exclude funds that lack data in any of these categories.Learn more about Investing