Healthcare ETF XLV lowers dividend income; direct stock picks offer better yields.

The Health Care Select Sector SPDR Fund (XLV) offers broad healthcare exposure but delivers a low dividend yield around 1.5% due to its cap-weighted structure favoring large, lower-yield stocks like Eli Lilly. Directly owning top XLV holdings AbbVie, Johnson & Johnson, and Bristol Myers Squibb can significantly boost income, with yields ranging from 2% to 3.75% and consistent dividend growth. However, this approach increases single-stock risk and reduces diversification. Investors seeking income should consider adding these stocks alongside or instead of XLV, especially in tax-advantaged accounts, to enhance dividend returns while maintaining some sector exposure.