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Focus in on Consumer Staples Dividend Payers With These ETFsAuthor: Nathan Reiff. First 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.
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When it comes to dividend plays, consumer staples stocks can rank near the top. These companies often generate reliable income regardless of market conditions. Consumer staples firms also tend to benefit from pricing power, strong brand loyalty, and resilience during recessions. In turn, they may offer healthy, sustainable dividends to investors, even if they lack the price swings that can lead to outsized capital gains. While some investors prefer to hand-select individual dividend stocks, an exchange-traded fund (ETF) focused on consumer staples names may be a better option for passive income investors. Although only a small number of these funds follow a specific dividend strategy, others take a more general approach and can still deliver a compelling distribution. A New, Relatively Unknown Consumer Staples and Call Options Fund
First, consider a fund focused on the consumer staples sector that also lists income as a strategic goal: the State Street Consumer Staples Select Sector SPDR Premium Income ETF (NYSEARCA: XLSI). XLSI is a newer fund, having launched in July 2025, and it stands out among sector-focused funds for its active management approach and, as a result, its relatively high annual fee of 0.35%. The interesting aspect of XLSI is that it aims for dividend distributions, but not necessarily by targeting stocks with strong dividend yields. Instead, XLSI gives exposure to a consumer staples-focused portfolio and then builds its distributions through an overlayed call options strategy. XLSI is up modestly year to date (YTD), but it pays a hefty dividend yield of 8.9%. Investors may find liquidity to be a concern, however, as the niche fund has under $3 million in managed assets and very low trading volume. High-Cost Fund With Unique Methodology, But Dividend Yield Helps It Stand OutFirst Trust Consumer Staples AlphaDEX Fund (NYSEARCA: FXG) takes an approach to the consumer staples sector based on a quant-screened methodology that seeks to identify individual companies most likely to outperform their peers. The result is a fairly evenly allocated collection of around 40 holdings, in which no single stock dominates the basket. FXG is up about 7% YTD, which may or may not make its high expense ratio of 0.63% worthwhile. However, despite not being expressly focused on dividends, FXG also offers a dividend yield of 2.7%, which is a compelling reason for passive income seekers to consider the fund. While FXG has a significantly larger asset base than XLSI, at more than a quarter of a billion dollars, it is still fairly lightly traded compared with more generalized sector funds. 2 Other Broad Consumer Staples Funds With Surprisingly Strong DividendsUltimately, some investors looking for passive income may find that a more diversified fund offers the right balance. The iShares Global Consumer Staples ETF (NYSEARCA: KXI) holds close to 100 positions in consumer staples stocks from developed markets, giving it access to a wider universe of names than many other ETFs focused on this sector. Still, the largest positions in the portfolio approach 10% of the overall basket, so the large number of holdings does not necessarily mean this is the most diversified fund available. Investors will pay a bit more for KXI than for other sector funds because of its international focus, as the fund carries an expense ratio of 0.39%. Its 5% YTD performance comes in slightly below the other funds on this list, but the global exposure may provide some insulation against macro factors specific to the United States. It also offers a dividend yield of 2.2% to appeal to passive income fans. With $8 billion in managed 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. For a broad sector fund, its portfolio of just over 100 names is perhaps not as deep as some investors might expect. It is also heavily weighted toward specific names like Walmart Inc. (NASDAQ: WMT) and Costco Wholesale Corp. (NASDAQ: COST), which together make up about a quarter of assets. For the price, though, it's hard to beat VDC's performance and dividend relative to alternatives in the sector. This fund has returned 8% YTD, the best performance in 2026 so far among the funds on this list, and also pays a dividend yield of 2.1%. Although not as high as some of the other yields in the space, the combination of returns, low fees, and liquidity make VDC a strong contender. |
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