Vanguard’s Dividend ETFs: A Guide to VIG, VYM, and VYMI

Vanguard, a leading investment advisory firm and global asset manager, has cemented itself as one of the biggest names in exchange-traded funds (ETFs). With a portfolio of 116 ETFs, including three dividend-focused funds, VIG, VYM, and VYMI, investors can choose from distinct yield and growth strategies.

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VIG: Dividend Appreciation

The Vanguard Dividend Appreciation ETF (VIG) tracks the S&P U.S. Dividend Growers Index, targeting high-quality companies with proven track records of increasing their dividend payments over time. By focusing on Dividend Achievers and Dividend Contenders, VIG excludes the top 25% highest-yielding stocks to avoid risk. With more than $112 billion in assets under management (AUM) and an expense ratio of 0.04%, VIG currently yields 1.47% or $3.58 per share annually.

VYM: High Yield From U.S. Companies

The Vanguard High Dividend Yield ETF (VYM) is designed to track the performance of the FTSE High Dividend Yield Index, providing exposure to U.S. companies that are forecast to pay above-average dividends. With about $83 billion in AUM and an expense ratio of 0.04%, VYM primarily focuses on large-cap stocks across a range of sectors, with financials being its largest sector exposure at 21.8%. The fund currently yields 2.2% or $3.63 per share annually.

VYMI: High Yield With a Global Twist

The Vanguard International High Dividend Yield ETF (VYMI) targets high yield through a global lens, tracking a market-cap-weighted index of developed and emerging market firms (ex-U.S.) that are forecast to pay above-average dividends over the next 12 months. With approximately $21.3 billion in AUM and an expense ratio of 0.07%, VYMI currently yields 3.42% or $3.60 per share annually.

Each of these ETFs has its unique strengths and characteristics, making them appealing to different types of investors. VIG focuses on U.S.-based Dividend Achievers and Dividend Contenders, while VYM targets U.S. companies with high dividend yields. VYMI, on the other hand, offers a global perspective on high-yield investments.

In terms of performance, VYMI has outperformed the other two ETFs, posting a year-to-date (YTD) gain of nearly 17%. VYM has also outperformed the S&P 500 with a YTD gain of about 15%. VIG, while not the highest-performing ETF, has gained around 11% YTD.

Investors should consider their individual financial goals, risk tolerance, and investment horizon when choosing between VIG, VYM, and VYMI. By understanding the unique characteristics and strengths of each ETF, investors can make informed decisions and create a diversified portfolio that aligns with their investment objectives.