Introduction
In today’s uncertain economic climate, investors are increasingly seeking reliable ways to generate income without constant market monitoring. If you’re one of them, Exchange-Traded Funds (ETFs) designed for passive income could be your smartest move in 2025. With the right selection, ETFs can offer a consistent income stream through dividends, along with the long-term growth potential of a diversified portfolio.
This guide explores the best ETFs for passive income in 2025, focusing on funds that provide monthly or quarterly payouts, low expense ratios, and solid performance histories. Whether you’re investing from the US, UK, Canada, or beyond, these globally accessible ETFs can help you build a steady cash flow while preserving capital. You may also find it helpful to explore Morningstar’s latest list of top high-dividend ETFs for passive income in 2025 as an additional reference.
By the end of this article, you’ll have a clear understanding of which ETFs align with your income goals—and how to use them strategically to grow your wealth without active management. Let’s dive into the most promising passive income ETFs for the year ahead.
Best ETFs for Passive Income in 2025
- Vanguard High Dividend Yield ETF (VYM)
- iShares Select Dividend ETF (DVY)
- Schwab U.S. Dividend Equity ETF (SCHD)
- Global X Super Dividend ETF (SDIV)
- iShares International Select Dividend ETF (IDV)
- Invesco Preferred ETF (PGX)
- SPDR S&P Dividend ETF (SDY)
Vanguard High Dividend Yield ETF (VYM)
VYM is one of the most trusted ETFs for long-term passive income seekers. It focuses on high-dividend-yielding U.S. companies, offering investors exposure to stable blue-chip stocks. With a low expense ratio and broad diversification, VYM is ideal for those who want consistent quarterly dividends without taking on excessive risk. Its top holdings often include industry giants from sectors like healthcare, finance, and energy.
VYM bounces from key support — momentum remains bullish as passive income investors hold strong (Do your own analysis).
iShares Select Dividend ETF (DVY)
DVY is a reliable ETF designed for investors seeking steady monthly income through high-quality U.S. dividend-paying stocks. It emphasizes financial stability and strong dividend histories, making it a popular choice among income-focused investors. With broad sector diversification—including utilities, industrials, and consumer goods—DVY offers a balanced approach to passive income. Its consistent performance and monthly payout structure make it particularly attractive for retirees and long-term wealth builders.
DVY holds firm above support, signaling renewed bullish momentum as income-focused investors anticipate a breakout to new highs. (Do your own analysis).
Schwab U.S. Dividend Equity ETF (SCHD)
SCHD is a highly regarded ETF for passive income seekers who prioritize quality, consistency, and low costs. It targets fundamentally strong U.S. companies with a track record of sustainable dividends and solid financial performance. Known for its low expense ratio and emphasis on companies with high return on equity, SCHD offers both growth and income potential. Its diversified portfolio—spanning sectors like technology, healthcare, and consumer goods—makes it a smart long-term investment for those aiming to build reliable monthly or quarterly income with reduced volatility.
SCHD eyes continuation after pullback—bullish structure remains intact for income-focused investors. (Do your own analysis)
Global X Super Dividend ETF (SDIV)
SDIV is designed for investors seeking high monthly income through a globally diversified dividend strategy. It focuses on 40 of the highest-yielding dividend stocks from around the world, offering exposure beyond U.S. markets to regions like Asia, Europe, and Latin America. With its monthly distribution schedule, SDIV attracts income-focused investors who prioritize regular cash flow. While it carries higher risk due to exposure in volatile markets, it also offers greater yield potential making it a bold choice for investors balancing income and international diversification.
SDIV trades in a downtrend, but presents a potential value opportunity for long-term income investors willing to embrace higher risk. (Do your own analysis)
iShares International Select Dividend ETF (IDV)
DV is an excellent option for investors seeking geographic diversification along with consistent dividend income. This ETF targets high-yielding international companies, primarily from developed markets outside the U.S., such as Europe, Asia-Pacific, and Canada. IDV’s strategy focuses on financial strength, dividend consistency, and value, making it appealing for those looking to balance income with global exposure. Its quarterly payouts and exposure to foreign currency trends make it a strategic pick for globally-minded passive income investors.
IDV moves sideways in consolidation investors should monitor for a strong entry signal before committing capital. (Do your own analysis)
Invesco Preferred ETF (PGX)
PGX is tailored for investors seeking stable income with lower volatility through exposure to preferred stocks. This ETF focuses on a diversified portfolio of preferred securities that typically offer higher yields than common stocks and bonds. With a mix of fixed-income characteristics and equity-like features, PGX appeals to income investors who want steady dividends and capital preservation. Its monthly distributions and relatively lower interest rate sensitivity make it a solid choice for conservative passive income portfolios.
PGX is currently consolidating in a sideways pattern; interested investors should wait for a clear breakout before entering. (Do your own analysis)
SPDR S&P Dividend ETF (SDY)
SDY is renowned for its focus on companies with a long history of increasing dividends, making it a favorite among income-focused investors seeking reliable growth and stability. This ETF tracks the S&P High Yield Dividend Aristocrats Index, which includes firms that have consistently raised dividends for at least 20 consecutive years. With a diversified portfolio across sectors like consumer staples, industrials, and utilities, SDY offers both capital appreciation and steady dividend income, ideal for long-term wealth building.
SDY’s strong uptrend continues, currently awaiting a healthy pullback—an ideal entry opportunity for investors. (Do your own analysis)
Tips to Choose the Right ETF for Passive Income
- Expense Ratios:
The expense ratio is a critical factor that directly impacts your net returns. ETFs with lower expense ratios charge less for management fees, allowing you to retain more of your investment income. When selecting a passive income ETF, prioritizing funds with minimal costs ensures greater long-term profitability. - Dividend Consistency:
Consistent dividend payouts are essential for reliable passive income. Look for ETFs whose underlying holdings have a strong track record of regular and stable dividend payments. Such consistency not only provides predictable cash flow but also signals the financial health and stability of the companies within the ETF. - Portfolio Size and Liquidity:
A well-sized portfolio offers better diversification, reducing individual stock risk. Additionally, liquidity is crucial—it refers to how easily you can buy or sell ETF shares without significantly impacting the price. Highly liquid ETFs typically have tighter bid-ask spreads, lowering your trading costs and ensuring smoother transactions.
Graphic Chart Design
| Rank | ETF Name | Ticker | Dividend Yield | Expense Ratio | Focus Area | Region |
|---|---|---|---|---|---|---|
| 1 | Vanguard High Dividend Yield ETF | VYM | ~3.2% | 0.06% | U.S. Large Cap | USA |
| 2 | iShares Core U.S. Aggregate Bond ETF | AGG | ~3.5% | 0.03% | Bonds | USA |
| 3 | Global X SuperDividend ETF | SDIV | ~11% | 0.58% | Global High Yield | Global |
| 4 | Schwab U.S. Dividend Equity ETF | SCHD | ~3.7% | 0.06% | Blue-chip Dividends | USA |
| 5 | iShares Global Clean Energy ETF | ICLN | ~1.8% | 0.42% | Renewable Energy | Global |
| 6 | iShares MSCI Emerging Markets ETF | EEM | ~2.0% | 0.69% | Emerging Markets | Asia, LatAm |
| 7 | Invesco QQQ Trust | QQQ | ~0.6% | 0.20% | Tech & Growth | USA |
| 8 | SPDR S&P Dividend ETF | SDY | ~3.6% | 0.35% | Dividend Aristocrats | USA |
| 9 | X Trackers MSCI Europe Small Cap ETF | XXSC | ~2.1% | 0.30% | European Small Caps | Europe |
| 10 | BMO Canadian Dividend ETF | ZDV.TO | ~4.2% | 0.39% | Canadian Blue-chips | Canada |
Final Thoughts – Build Your Wealth with Smart ETF Choices
Passive income through ETFs is an achievable and sustainable financial goal, not just a distant dream. By choosing the right ETFs, you can create a steady stream of income that supports your financial freedom.
Whether you decide to reinvest your dividends to accelerate growth or use them as regular cash flow, the key is to stay consistent and disciplined in your approach. For further insights, you might explore these high-yield dividend ETFs that can help grow your passive income in 2025 and beyond.
Start with a manageable investment, and focus on steady, long-term growth. Over time, these small, smart steps can compound into significant wealth.
