When people look for a dividend ETF to invest in, they usually target the industry’s biggest names: the Vanguard Dividend Appreciation ETF (VIG), the Vanguard High Dividend Yield ETF (VYM), the iShares Core Dividend Growth ETF (DGRO), and the Schwab U.S. Dividend Equity ETF (SCHD).
Together, these funds manage $270 billion of investor money.
But bigger isn’t always better. DGRO and VYM carry 4-star Morningstar ratings, but VIG and SCHD only have 3-star ratings, indicating just average risk-adjusted returns over time. In fact, SCHD has been one of the worst-performing ETFs within its Morningstar category over the past 1-, 3- and 5-year periods.
Sometimes you need to dig to find better options, since performance only tells part of the story.
If you find a strong-performing dividend ETF and discover that it’s also backed by a smart and thoughtful stock selection strategy, that’s when you know you may have found a little-known winner.
A few dividend ETFs have beaten the S&P 500 in 2025
It’s not surprising that dividend stocks haven’t been the best performers this year. That market continues to be controlled by tech, growth, and AI-driven stocks. The Magnificent 7 stocks are still driving the narrative, and most investors want to keep jumping in before the rally runs out of gas.
Dividend stocks, which consist mostly of well-established, durable, mature companies, haven’t found a lot of interest. When AI seems to be taking over the world, nobody wants to invest in companies that make cereal and bathroom tissue.
Related: Forget VOO, SPY, VTI: Best stock investing pick is this Fidelity fund
There are some winners in the dividend ETF space, but they are few and far between. Of the 108 U.S. dividend ETFs listed in the ETF Action database, just 10 are beating the S&P 500 year-to-date.
One of them, however, is performing exceptionally well. Not only is it an elite performer within the dividend ETF universe, it’s an elite performer within its entire Morningstar category.
The LAFFER TENGLER Equity Income ETF is among the best of the best right now
Don’t feel bad if you haven’t heard of the LAFFER TENGLER Equity Income ETF (TGLR). Most people haven’t.
With a mere $19 million in AUM, it resides below the radar for many investors. But a fund doesn’t need to be big to perform well. It just needs a smart strategy and some success at hitting the right stocks at the right time. TGLR has done just that.
Its 21% year-to-date return (as of Oct. 2, 2025) is beating the S&P 500 by nearly 6% and VIG & VYM by roughly 9%. Within the U.S. dividend ETF category, it’s the second-best-performing ETF over the year-to-date and 1-year periods (it hasn’t been around long enough to qualify for anything further).
Its performance against its large-cap value fund peers may be better. Of nearly 1,000 funds, TGLR ranks in the top 1%.
Source: Morningstar
Why is TGLR such a successful dividend ETF?
To understand how TGLR has done so well, we need to do a deeper dive into the portfolio and how it’s constructed.
The process starts by looking at a number of qualitative and quantitative fundamental factors. According to the fund’s prospectus:
Qualitative Factors:
- Catalyst for Outperformance
- Franchise Value & Market Growth
- Top Management/Board of Directors
Quantitative Factors:
- Sales/Revenue Growth
- Operating Margins
- Relative P/E
- Positive Free Cash Flow
- Dividend Coverage/Growth
- Asset Turnover Ratio
- Use of Cash (buyback, debt, dividend)
- Leverage
- Financial Risk
Using this as a foundation, it then evaluates equities using two proprietary valuation metrics — relative dividend yield (RDY) and relative price-to-sales ratio (RPSR). With the high quality profile established using fundamental metrics, the RDY and RPSR measures help identify current value opportunities within the large-cap dividend stock universe.
In summary, you’ve got a multi-factor approach — quality and value. The final consideration, the stock’s dividend, helps TGLR produce an overall yield higher than that of the S&P 500.
The resulting portfolio does have a distinct tech presence, but not an outsized one. It’s relatively diversified with double-digit allocations to tech, consumer discretionary, financials, and industrials.
Source: LAFFER TENGLER
The fund only holds about 25-35 positions, so there is a concentration factor to consider, but that means that these are high-conviction picks.
The fact that TGLR is actively managed means that recent outperformance is a result of manager skill and aptitude. This factor is often a strong predictor of long-term success.
Key takeaways for TGLR:
- TGLR uses deep fundamental research for active stock selection.
- The portfolio tilts towards high quality, value, and above-average yield.
- TGLR is the second-best-performing U.S. dividend ETF year to date.
- Its performance ranks in the top 1% of Morningstar’s Large Value category.
TGLR can continue this outperformance trend
Given its history of superior absolute and risk-adjusted returns, TGLR probably deserves more attention than it’s getting. It has a well-rounded stock selection approach, emphasizes quality, value, and short-term catalysts and has the track record that proves this methodology works.
The management team has also demonstrated an ability to deliver for shareholders.
The market will have you focus on VIG, VYM, and other popular dividend ETFs. You should also be focusing on TGLR.
Related: QQQ vs. QQQM vs. QQQJ: Present tech vs. future innovation
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