3 Dividend ETFs Offer Different Ways to Navigate the Post-Election Sell-Off

Key Points

• The Schwab U.S. Dividend Equity ETF focuses on established dividend-paying companies and offers a low-cost approach to long-term income.
• The JPMorgan Equity Premium Income ETF generates additional income through options strategies, although its monthly distributions vary.
• The Invesco Variable Rate Preferred ETF offers exposure to preferred securities and hybrid debt with less interest-rate sensitivity than traditional fixed-rate preferreds.

The U.S. midterm elections have passed, removing one of the biggest clouds of uncertainty hanging over markets. But despite the post-election clarity, plenty of worry remains in different pockets of the market. One major theme of election night was Americans' fatigue with AI and data centers. Forty-one measures banning or restricting data center growth were on the ballot across 30 districts, and voters approved 40 of the 41 measures. Many stocks in the AI ecosystem were already in the midst of heavy drawdowns, and the selling intensified Thursday after the resounding public rejection.

But despite the tech sector sell-off, the S&P 500 remains within 5% of all-time highs. Investors fleeing the tech scene are looking for new opportunities in other sectors, such as consumer staples, healthcare, and utilities. These defensive sectors typically offer less upside, but they also tend to pay dividends. And with the volatility index (VIX) spiking and the Fed hiking cycle underway, income-paying stocks are looking more and more attractive. But an income portfolio needs diversified streams, and each of the following three ETFs uses a different mechanism to generate dividends.

Schwab U.S. Dividend Equity ETF: Tax-Efficient Dividend Growth

You don’t need to reinvent the wheel when constructing a dividend stock portfolio. Sometimes the old ways are best, and the Schwab U.S. Dividend Equity ETF NYSEARCA: SCHD screens for high-quality dividend stocks and has a tax-efficient qualified quarterly payout. The fund tracks the Dow Jones U.S. Dividend 100, an index that requires 10 years of dividend payouts for inclusion and ranks holdings by factors such as cash flow, return on equity, and dividend growth rate.

You won’t entirely escape the tech sector with SCHD, and semiconductor company Texas Instruments Inc. NASDAQ: TXN is the current top holding. But consumer staples and healthcare comprise nearly 40% of the portfolio, and more than 94% of its stocks are based in the U.S. The current dividend yield is 2.94%, with a trailing 12-month (TTM) distribution yield of 3.24%. It’s also one of the cheapest and most liquid dividend funds, with a 0.06% expense ratio and more than 22 million shares traded daily on average.

SCHD is large, low-cost, and tax-efficient, but that doesn’t mean it's risk-free. It’s up roughly 30% year-to-date (YTD), outperforming the S&P 500 and benefiting heavily from the tech rotation. Crowding risk is now a factor after a 10% gain in October, and dividend growth has slowed in 2026 compared to 2025. Investors are paying more for each dollar of income this year, and the fund's energy exposure leaves it susceptible to oil price shocks. SCHD can anchor an income portfolio, but consider averaging in over the next quarter to limit potential shocks.

JPMorgan Equity Premium Income ETF: Income Growth in Choppy Markets

If you want to add a little volatility to your income investments, the JPMorgan Equity Premium Income ETF NYSEARCA: JEPI deserves a look. It has plenty of size with $46 billion in assets under management (AUM), but costs significantly more than SCHD with a 0.35% expense ratio. The higher cost comes from the mechanics: the fund uses a combination of equity and options to generate high yields, and the current dividend yield of about 8.7% tops the list of our three dividend-paying funds.

The fund holds over 100 defensive large-cap stocks and sells out-of-the-money (OTM) call options through equity-linked notes (ELNs). The options premium generates more than 80% of total income, and the fund pays dividends monthly as ordinary income because ELNs are not qualified. Because of this tax structure, JEPI is better held in a tax-advantaged account, such as an IRA or 401(k).

JEPI complements a portfolio with SCHD since the income engine grows as market volatility increases. The fund has an extremely low beta (0.52), which protects principal in downturns. But the fund also surrenders upside during rallies, and its distributions are variable and unpredictable. If the AI rally resumes with ferocity and volatility collapses, JEPI’s monthly income will drop as well.

Invesco Variable Rate Preferred ETF: Rate-hedged Monthly Coupons

The Invesco Variable Rate Preferred ETF NYSEARCA: VRP is the smallest fund on our list with just under $3 billion in AUM. It’s also the most expensive, carrying a 0.50% expense ratio. But it deserves inclusion because it's one of the most efficient funds for hedging interest rate risk, and its holdings are concentrated in the banking sector instead of tech, unlike the tech-heavy (and cheaper) Global X U.S. Preferred ETF NYSEARCA: PFFD. With tech companies issuing convertible preferred stock to fund the AI buildout, PFFD no longer fits the basket of safe-haven defensive funds.

VRP is composed of approximately 60% preferred stock and 35% U.S.-listed hybrid bonds, with more than 90% of holdings issued by domestic companies. The dividend, currently yielding 5.92%, is paid monthly through floating-rate contractual coupons. The coupon resets with short-term rates, which means a Fed hiking cycle would raise payouts.

Additionally, VRP avoids the problem most tech-heavy preferred funds face by stacking short-duration holdings from financial firms and banks. The fund is the least correlated to the AI trade of the three selected, but it should also be held in an IRA or 401(k) account since contractual coupon payments are taxed as ordinary income.