Dividend stocks often pay 5% or less. These days, with the S&P 500 climbing to record highs, the average stock in the index yields just 1.1%. Unless you're already rich, that's not going to generate much dividend income for you. Instead, a better strategy is to invest in a top exchange-traded fund (ETF), such as the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD), and have it grow by reinvesting dividends.