Vanguard High Dividend Yield strikes a balance between higher yield and the inherent risks. Weighting stocks by market cap steers the fund toward more stable, large-cap stocks and away from those whose dividends may be distressed. Its consistently strong risk/reward profile underpins its Process Pillar rating upgrade to High from Above Average.

This fund tracks the FTSE High Dividend Yield Index. It starts with large- and mid-cap stocks in the FTSE USA Index, excluding REITs, and ranks them by their expected dividend yield over the next 12 months. The index selects those representing the higher-yielding half of eligible dividend-paying stocks. Selected holdings are weighted by float-adjusted market cap, pulling the portfolio toward larger, more stable stocks. 

Focusing on dividend yield gives the portfolio a value orientation that can open the portfolio to risk. Value traps, or stocks with deteriorating fundamentals and declining prices, pose a significant risk to dividend funds. But this strategy limits its exposure to risky companies. Sweeping half of the dividend-paying universe into its portfolio diversifies stock-specific risks and limits the influence of distressed firms. Market-cap-weighting also emphasizes larger, more stable firms that should have the capacity to continue making dividend payments. This mitigates the impact of value traps because their weight drops as prices fall.

Leaning toward stable companies comes at the cost of maximizing dividend yield. But the fund's yield of 3.10% still surpassed the Russell 1000 Value Index by over 1 percentage point as of August 2023. Stability extended to performance as well, with the fund experiencing a five-year standard deviation 8% lower than its category bogy.

Similar to other dividend-focused funds, this fund's sector composition can deviate substantially from the category index's, owing to its yield orientation. Market-cap weighting normally keeps these differences small, but the fund's yield screen can still exclude a significant portion of the market in extreme conditions. Between 2010 and 2018, for instance, the fund's allocation to financial stocks was anywhere from 15-20 percentage points below the category average. This is an artifact of the post-financial-crisis dividend cuts across much of the sector. While this did not hurt the fund's performance significantly, sector bets tend to be an uncompensated risk.

This fund's cost-conscious approach sets it apart from the crowd. The 0.06% fee for its exchange-traded fund share class is among the lowest in the large-value Morningstar Category.

Analyst Rating

A steady approach to higher yield.

Director

Bryan Armour

Exxon Mobil

JPMorgan Chase & Co

Johnson & Johnson

Broadcom

Procter & Gamble

Home Depot

Chevron

Merck

AbbVie

PepsiCo

Vanguard High Dividend Yield casts a wide net and uses market-cap-weighting to rein in risk. It delivers a competitive current yield while sporting strong fundamentals, which has consistently benefited risk-adjusted performance. These features underpin the fund’s Process Pillar rating upgrade to High from Above Average.

High

Process

The Vanguard equity index group boasts seasoned managers and a dedicated supporting staff well-equipped to provide tight index tracking, earning it an Above Average People rating.

Gerard O'Reilly and Nick Birkett comanage this strategy. O'Reilly, a principal at Vanguard, has been with the firm since 1992. Birkett, who has been with Vanguard since 2017, replaced William Coleman on this strategy in February 2023. O'Reilly has been a named manager on this strategy since 2016. Vanguard frequently rotates its managers to promote breadth and depth across the team—we do not expect the manager change to disrupt the strategy in any way.

The managers are responsible for the fund's trading, providing more portfolio insights than a stand-alone trader. They are supported by a global team of dedicated personnel and sophisticated, scalable technology that optimize precision and reduce managers' workload. Vanguard's independent risk management team works closely with the managers to monitor trades and review any potential issues. Managers' compensation is tied to performance using a combination of tracking error and excess return metrics, which aligns their interests with investors'.

Above Average

People

The Vanguard Group retains a High Parent rating. 

Mutual ownership, low costs, and a direct-to-investor playbook have helped spur Vanguard's leadership within the United States. Client service missteps notwithstanding, Vanguard over the past decade has grown its market share of U.S. open-end and exchange-traded fund assets at about a 5% annualized clip. At that rate, Vanguard's portion of the U.S. industry will cross 50% around 2035.

True, some competitors can now match or even undercut Vanguard on fees for broad market exposure. But Vanguard's burgeoning advice business could help it keep or even extend that lead. Through Digital Advisor and Personal Advisor Services, Vanguard has built an increasingly compelling ecosystem of advice for investors with simple to complex needs.

Vanguard is also using its advice business to expand overseas, but that's a work in progress. Of Vanguard's USD 7.6 trillion in global assets under management in March 2023, non-U.S. investors owned less than 10%, a figure that has changed little in recent years. Strategic shifts in China and other markets account for the slow pace, including returning money to institutions that had been layering on fees. Vanguard hopes to recoup that money and more by focusing on individual investors and the advisors who serve them. Provided Vanguard sticks to its playbook, its advantages should translate into success abroad, too.

Parent

Vanguard High Dividend Yield ETF

VYM tracks the FTSE High Dividend Yield Index. The index selects high-dividend-paying US companies, excluding REITS, and weights them by market cap.

Dominion Energy

Kroger

Target

Our stock screener continues to help us find some awesome undervalued dividend stocks to buy. In June, we received $2,341.62 in dividend income.

Dividend Income Summary: Bert's June 2021 Summary

ALPS Barron's 400 ETF

Ford Motor Company

First Trust Natural Gas ETF

iShares Core High Dividend ETF

iShares Russell 1000 Value ETF

iShares MSCI USA Quality Factor ETF

Schwab U.S. Large-Cap Value ETF

Invesco S&P 500 Quality ETF

Invesco S&P 500 Low Volatility ETF

SPDR Portfolio S&P 500 High Dividend ETF

iShares Edge MSCI Min Vol USA ETF

Vanguard Value ETF

SPDR S&P Homebuilders ETF

SPDR S&P Retail ETF

We have highlighted some winning strategies that could prove to be extremely beneficial for investors in the second half of 2021.

5 Winning ETF Strategies for the Second Half

Aflac

Eaton

KeyCorp

Lockheed Martin

LyondellBasell Industries

T. Rowe Price Group

Vanguard FTSE Europe ETF

Vanguard S&P 500 ETF

Viatris

Wendy's

The stock market is continuing to set records highs, closing over $4,300 heading into July 4th. In June, we (my wife and I) received a total of $3,676.63 of dividend income.

Dividend Income Summary: Lanny's June 2021 Summary

Amgen

CMS Energy

Cisco Systems

Evergy Inc

Kellogg

Kimberly-Clark

Alliant Energy

M&T Bank

Principal Financial Group

Philip Morris

Southern Company

Sempra Energy

Truist Financial

WEC Energy Group

Xcel Energy

There are 20 High-Yield Dividend Stocks on the July 2021 watchlist. The watchlist lost 1.73% in June but is still up over 35% since November 2020.

High Yield Dividend Stocks For July 2021

Ally Financial

People's United Financial

Pfizer

Provident Financial Services

AT&T

Verizon

Pfizer hasn't had their price move really this year.

Dividend Stock Watch List: Lanny's July 2021 Edition

VYM offers investors a unique fund that combines share appreciation with an above-average dividend income investors can feast on. VYM has returned just under 80% on a $10,000 investment over the past five years.

Dividends And Growth Try Vanguard's High Dividend Yield ETF

The Vanguard High Dividend Yield ETF has put up solid performance with a moderate dividend yield. Nearly a quarter of the company's holdings are financials, with other sectors spread out more evenly.

The Vanguard High Dividend Yield ETF: A Mediocre Process Leads To Mediocre Results

Coca-Cola

SpartanNash

The journey to financial freedom does not take breaks and one must continue to persevere through uncertainty, put cash to work and push that forward dividend income forward. I invested quite a bit into a Vanguard Exchange Traded Fund (ETF). This has helped me amass an investment with Vanguard of over $30,000 since last year.

Dividend Stock Purchase: Lanny's May 2021 Summary

iShares S&P Mid-Cap 400 Value ETF

iShares S&P Mid-Cap 400 Growth ETF

iShares Core S&P Small Cap ETF

iShares S&P Small-Cap 600 Value ETF

iShares S&P Small-Cap 600 Growth ETF

iShares S&P 500 Value ETF

iShares S&P 500 Growth ETF

iShares MSCI USA Momentum Factor ETF

Invesco S&P 500 High Beta ETF

SPDR S&P 500 ETF Trust

Vanguard U.S. Liquidity Factor ETF

US equity factor strategies targeting high-beta and small-cap value shares continue to post the strongest performances so far in 2021. Invesco S&P 500 High Beta is in the lead with a 36.3% return year to date.

High Beta, Small Cap Value Lead U.S. Equity Factor Returns In 2021

The Vanguard High Dividend Yield ETF (VYM) is a popular choice for dividend and income investors, offering a diversified, convenient, low cost, and liquid approach for dividend and income. This post provides a closer look under the hood to better understand the approach, advantages, and limitations of VYM.

VYM: A Look Under The Hood

Vanguard Financials ETF

Communication Services Select Sector SPDR Fund

These ETFs should make a winning portfolio for June.

5 ETFs to Buy for June

VanEck Fallen Angel High Yield Bond ETF

Invesco Taxable Municipal Bond ETF

iShares Core S&P 500 ETF

iShares iBoxx $ Investment Grade Corporate Bond ETF

Vanguard Short-Term Corporate Bond ETF

Insurers are once again investing in ETFs, but the types of funds have changed.

Bond ETF Demand By Insurers Rising

ProShares S&P 500 Dividend Aristocrats ETF

Schwab US Dividend Equity ETF

SPDR S&P Dividend ETF

Vanguard Dividend Appreciation ETF

Set up a sustainable income engine while keeping an eye on the bigger picture.

Earn $300 in Monthly Retirement Dividends With 5 Easy Steps

Invesco S&P 500 High Dividend Low Volatility ETF

SPHD has a higher dividend yield. VYM holds safer dividend stocks.

SPHD Vs. VYM: Safety First

Invesco Senior Loan ETF

ProShares Short MSCI Emerging Markets

iShares U.S. Regional Banks ETF

Federal Reserve officials showed cautious optimism about U.S. economic recovery. This along with rising inflation has triggered the talks of QE taper.

Taper Talks to Start Soon? ETFs to Win

The S&P 500 is now hitting and crossing over 4,200+ and valuation continues to be a struggle in the stock market. My dividend stock portfolio was burnt by dividend cuts in 2020 and lost over $800+ in forward dividend income.

Dividend Stock Purchase: Lanny's April 2021 Summary

iShares Select Dividend ETF

Vanguard Total World Stock ETF

Vanguard Total Stock Market ETF

Looking for a steady income stream to provide stability in your portfolio? Here are seven of the best dividend ETFs to invest in the coming year, ranked by assets.

7 Dividend ETFs To Buy And Watch For 2021

iShares Emerging Markets Dividend ETF

Global X Superdividend ETF

Vanguard Utilities ETF

Fidelity International High Dividend ETF

iShares Mortgage Real Estate ETF

Whether you're looking for reliable and growing dividends, or you seek high yields, you may find something you like with these dividend ETFs. The post 7 Great ETFs to Buy for Dividend-Hungry Investors appeared first on InvestorPlace.

7 Great ETFs to Buy for Dividend-Hungry Investors

Costco

Genuine Parts

Altria

Valero Energy

Dividend-focused investing is currently more popular than it has been in decades. In this article, I share four situations when dividends play an important role in my investment process.

The Four Cases When Dividends Matter

VYM invests in high dividend U.S. stocks. The fund has outperformed these past few months due to the ongoing economic recovery and reopening.

VYM Invests In Undervalued Dividend Stocks, Yields 2.9%, And Is A Buy

It's been a year of revival so far for the previously trailing small-cap value space in the US stock market. For now, small-cap value is the top-performing equity risk factor year to date, based on a set of exchange traded funds.

Will The Rebound For Small-Cap Value Stocks Endure?

VYM is often recommended to dividend investors, with advocates pointing to its 400+ holdings and high exposure to the Financial sector which is expected to do well this year. But VYM's diversification is really "diworsification." It is a Total Stock Market ETF that eliminates all stocks, dividend-paying or not, from companies achieving significant growth.

VYM: There's No Reason To Add This ETF To Your Dividend Stock Portfolio

Vanguard Real Estate ETF

Vanguard International High Dividend Yield ETF

Want steady investment income? These three Vanguard ETFs could be the perfect fit.

3 Vanguard Funds Perfect for Supplementing Social Security

VYM is an ETF that selects above-average dividend-yielding stocks from nearly the entire U.S. investable market. The ETF is well-diversified at the industry level on key measures including dividend yields, beta, earnings, and dividend growth rates, and forward P/E ratios.

How Vanguard's High Yield Dividend Index ETF Fits In Your Dividend Portfolio

Cardinal Health

Con Ed

Unilever

My dividend stock portfolio was burnt by dividend cuts in 2020 and lost over $800+ in forward dividend income. Therefore, I was ready to get back to basics and acquire more shares in the best quality dividend stocks out there. In total, my dividend stock purchases of VYM totaled $1,485.08, acquiring 15 total shares. This added $45 in forward dividend income.

Dividend Stock Purchase: Lanny's March 2021 Summary

News for Vanguard High Dividend Yield ETF ETF (VYM)