Investors wanting to focus on dividend investment may want to consider smart beta exchange-traded funds (ETFs). While traditional ETFs track ordinary indexes, smart beta ETFs follow an alternative weighting strategy and a mix of passive and active investing. They provide investors who believe markets are priced inefficiently with a cost-effective product that has the goal of maximizing returns, reducing risk and providing diversification.

These four smart beta ETFs focus on providing investors with strong dividend exposure. The information provided here was accurate as of Oct. 1, 2018. 

iShares Select Dividend ETF

The iShares Select Dividend ETF (NASDAQ: DVY) was launched by iShares in November 2003. The fund’s objective is to track the investment results of the Dow Jones U.S. Select Dividend Index, which includes U.S. equities that have provided consistently high relative dividend yields over a long period of time. Its holdings include companies across a variety of sectors, including utilities, consumer discretionary, energy and finance. 

The iShares Select Dividend ETF is one of the larger funds of its category, with $17.29 billion in net assets. It has an expense ratio of 0.39%, which is slightly below the category average. The fund has an average annual return rate of 8.36% since inception and pays investors a yield of 3.29%.

SPDR S&P Dividend ETF

The SPDR S&P Dividend ETF (NYSE: SDY) was formed in 2005 and seeks to replicate the price and yield performance of the S&P High Yield Dividend Aristocrats Index. That index is designed to measure the performance of the 50 highest dividend-yielding S&P Composite 1500 Index stocks that have a history of increasing their dividends each year for at least 20 consecutive years. Holdings include companies in the industrial, consumer staples, financial, utilities and real estate sectors, among others. 

The SPDR S&P Dividend ETF has net assets of $16,23 billion and an expense ratio of 0.35%. The fund pays a 2.35% yield and has an average annual return rate of 9.18% since inception.

Vanguard High Dividend Yield ETF

The Vanguard High Dividend Yield ETF (NYSE: VYM) was created by Vanguard in 2006. The fund adopts a strategy that tracks the performance of the FTSE High Dividend Yield Index, which consists of stocks that pay above-average dividends. The fund’s holdings include large companies across many sectors, including finance, healthcare, technology, consumer goods, and oil and gas.

The Vanguard High Dividend Yield ETF has a very low expense ratio of 0.08% and provides a yield of 3.17%. It has $30.50 billion in net assets and an average annual return rate of 9.18% since inception.

First Trust Value Line Dividend ETF

The First Trust Line Dividend ETF (NYSE: FVD), which launched in 2003, tracks the Value Line Dividend Index. The index is made up of stocks that pay above-average dividends and have the potential for capital appreciation.

The portfolio is constructed with the manager's proprietary ranking system. The fund's holdings include stocks with an equity market capitalization of more than $1 billion across several sectors, including utilities, finance, industrial, healthcare and information technology.

The First True Value Line Dividend ETF has $1.79 billion in net assets with an expense ratio of 0.70% and provides a yield of 2.37% and an average annual return rate of 9.93% since inception.