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Just For You
Focus in on Consumer Staples Dividend Payers With These ETFs
Author: Nathan Reiff. Article Published: 4/25/2026.
Key Points
- Consumer staples stocks can make great dividend plays for their reliability even during shifting market conditions.
- With dividend yields as high as 8.90%, there are a number of unique consumer staples ETFs combining passive income with diversification.
- KXI and VDC are more generalized sector funds, while FXG uses a quant-based methodology to select stocks, and XLSI has a unique call options approach for added income.
- Special Report: Elon Musk already made me a “wealthy man”
When it comes to dividend plays, consumer staples stocks often rank near the top. These companies generate steady revenue regardless of market conditions, benefiting from pricing power, brand loyalty and natural resistance to recessions. As a result, they frequently pay healthy, sustainable dividends—though they may lack the price volatility that can produce big capital gains.
Some investors may hand-pick individual dividend stocks, but exchange-traded funds (ETFs) focused on consumer staples can be an attractive option for passive-income investors. A few of these funds pursue explicit dividend strategies; others take a broader approach yet still deliver compelling distributions.
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One example is the State Street Consumer Staples Select Sector SPDR Premium Income ETF (NYSEARCA: XLSI). Launched in July 2025, XLSI stands out among sector funds for its active management and relatively high expense ratio of 0.35%.
XLSI seeks to generate distributions not by simply selecting high-yielding stocks but by providing consumer staples exposure and supplementing income through an overlaid call options strategy.
XLSI is modestly up year to date (YTD) and offers a substantial dividend yield of 8.9%.
However, liquidity may be a concern: the niche fund has under $3 million in assets under management and very low trading volume.
High-Cost Fund With Unique Methodology, But Dividend Yield Helps to Stand Out
The First Trust Consumer Staples AlphaDEX Fund (NYSEARCA: FXG) uses a quant-screened methodology to identify companies it expects to outperform peers.
The result is a fairly even allocation across roughly 40 holdings, with no single stock dominating the portfolio.
FXG is up about 7% YTD, which may justify its relatively high expense ratio of 0.63% for some investors. Although not explicitly a dividend fund, FXG yields about 2.7%, making it attractive to income-oriented investors. With assets exceeding a quarter of a billion dollars, FXG is much larger than XLSI but remains lightly traded compared with broader sector ETFs.
2 Other Broad Consumer Staples Funds With Surprisingly Strong Dividends
Some investors seeking passive income may prefer a more diversified fund. The iShares Global Consumer Staples ETF (NYSEARCA: KXI) holds nearly 100 positions across developed markets, offering a wider universe of names than many sector ETFs.
However, several of its largest positions approach 10% of the portfolio, so the number of holdings doesn’t automatically translate to maximum diversification.
KXI’s international exposure results in a higher expense ratio (0.39%). Its 5% YTD return lags some peers, but global holdings may offer insulation from U.S.-specific macro risks. It also offers a dividend yield of 2.2%, appealing to passive-income investors.
With about $8 billion in assets and an expense ratio of 0.09%, the stalwart Vanguard Consumer Staples ETF (NYSEARCA: VDC)is both the largest and the cheapest fund on this list by a wide margin.
Its portfolio of just over 100 names may be less deep than some expect, and it is heavily weighted toward large retailers like Walmart Inc. (NASDAQ: WMT) and Costco Wholesale Corp. (NASDAQ: COST), which together make up about a quarter of assets.
VDC has returned 8% YTD—the best performance among these funds—and yields about 2.1%. While its yield is lower than some peers, VDC’s combination of strong returns, low fees and high liquidity make it a compelling choice for income-focused investors.
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