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Focus in on Consumer Staples Dividend Payers With These ETFs

Written by Nathan Reiff. Posted: 4/25/2026.

When it comes to dividend plays, consumer staples stocks are often near the top—companies that generate reliable income regardless of market conditions. Consumer staples firms frequently enjoy pricing power, brand loyalty, and natural resistance to recessions. As a result, they may pay healthy, sustainable dividends to investors, even if they lack the price volatility that can produce large capital gains.

Some investors prefer to hand-pick dividend stocks, but an exchange-traded fund (ETF) focused on consumer staples may be a better option for passive-income investors. A few of these funds have an explicit dividend strategy; others take a broader approach yet still deliver attractive distributions.

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One example of a sector fund that explicitly targets income is the State Street Consumer Staples Select Sector SPDR Premium Income ETF (NYSEARCA: XLSI). XLSI is a newer ETF, having launched in July 2025, and it stands out among sector funds for its active management—and its relatively high expense ratio of 0.35%.

The notable feature of XLSI is that it seeks to deliver distributions not necessarily by selecting only high-yield stocks, but by providing consumer staples exposure and then generating income through an overlaid call-options strategy.

XLSI is up modestly year to date (YTD) and currently yields a sizeable 8.9%.

Liquidity may be a concern: the niche fund manages under $3 million in assets and has very low trading volume.

High-Cost Fund With Unique Methodology, But Dividend Yield Helps It Stand Out

First Trust Consumer Staples AlphaDEX Fund (NYSEARCA: FXG) applies a quant-screened methodology to the consumer staples sector, aiming to identify companies likely to outperform peers.

The result is a fairly evenly allocated collection of around 40 holdings, with no single stock dominating the portfolio.

FXG is up about 7% YTD, which may not justify its relatively high expense ratio of 0.63% for some investors. Still, despite not being explicitly dividend-focused, FXG offers a dividend yield of 2.7%, a feature that can appeal to passive-income seekers. FXG also has a much larger asset base than XLSI—more than a quarter of a billion dollars—but it remains lightly traded compared with broader sector ETFs.

Two Other Broad Consumer Staples Funds With Surprisingly Strong Dividends

Some passive-income investors may prefer a more diversified fund. The iShares Global Consumer Staples ETF (NYSEARCA: KXI) holds nearly 100 consumer staples positions from developed markets, giving it access to a wider universe of names than many domestic sector ETFs.

Even so, the largest positions in the portfolio approach 10% each, so the high number of holdings doesn't automatically make it the most diversified option.

KXI’s international scope comes with a higher fee—an expense ratio of 0.39%. Its 5% YTD return trails some funds on this list, but the global exposure may provide insulation from U.S.-specific macro factors. It also offers a dividend yield of 2.2%, which can be attractive to income-focused investors.

By contrast, the long-established Vanguard Consumer Staples ETF (NYSEARCA: VDC) manages about $8 billion with a low expense ratio of 0.09%, making it both the largest and the cheapest fund on this list.

VDC’s portfolio of just over 100 names is not the deepest in the sector and is heavily weighted toward large retailers like Walmart Inc. (NASDAQ: WMT) and Costco Wholesale Corp. (NASDAQ: COST), which together account for about a quarter of assets.

Still, for the fee, VDC’s combination of performance, yield, and liquidity is hard to beat. The fund has returned 8% YTD—the strongest showing so far in 2026 among the funds listed here—and pays a dividend yield of 2.1%. While that yield is lower than some niche options, the low cost and ample liquidity make VDC a compelling choice for many investors.