Why do many index funds and ETFs pay lower dividends than individual dividend stocks?

A broad index fund holds hundreds or thousands of companies, and many of them, especially fast-growing technology firms, pay little or no dividend because they reinvest profits into growth. So the fund's overall dividend yield reflects a blend and tends to be modest, often around 1% to 2% for a total U.S. market fund. Dedicated dividend or high-yield funds screen for companies with bigger payouts, producing higher yields but concentrating in certain sectors. Remember that total return, which combines dividends and price growth, is what actually builds wealth, and a low-yield fund can outperform a high-yield one if its share prices rise more. Don't chase yield alone; a diversified fund's lower dividend is often a sign it holds more growth-oriented companies.