Three dividend ETFs let you keep AI stocks while collecting income

Dividend investors have faced a structural problem over the past two years: the Magnificent Seven stocks driving market returns tend to have low dividend yields, causing traditional dividend funds like SCHD and VYM to screen them out entirely. This leaves dividend-focused portfolios lagging the overall market and often double-weighted in lower-growth sectors like utilities and consumer staples. The three funds examined in this article were built to solve that problem by rethinking how income is generated from a portfolio of large-cap stocks.

Each fund takes a distinct path to the same holdings. FDVV enforces sector caps on its index-based approach, which is why NVIDIA reaches 6.84% and the Magnificent Seven lands near 20% of assets—traditional enough that utilities and REITs still anchor the portfolio but flexible enough to avoid complete exclusion of AI mega-caps. DGRW inverts the logic entirely, starting not with yield but with quality metrics like return on equity and earnings growth; NVIDIA, Microsoft, Apple, and Alphabet rise to the top because they generate enormous absolute dividend dollars despite sub-1% yields. BALI, the contrarian option, treats the stocks as a foundation for an options overlay, writing calls to produce the income that low-yield mega-caps alone cannot deliver.

The trade-offs are real and differ by investor need. FDVV returns 21.2% annually with $9.2 billion in assets, offering scale and simplicity but with concentration risk—NVIDIA alone drives more return variance than any three utility positions. DGRW appeals to longer-term compounders who accept lower current yield (trailing yield materially lower than BALI) in exchange for quality growth and monthly distributions useful for cash flow management. BALI's 7–8% current yield is unachievable through stock selection alone and reflects the options premium's real work, but the strategy caps upside during strong rallies and carries only three years of history. Each solves the income-versus-AI-exposure trade-off differently, making the choice depend entirely on whether the investor prioritizes total return, current income, or a balanced approach.