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.

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VYM stock is a set-it-and-forget-it holding that should pique the interest of practically any income-focused investor. The post Get Yield for Years with the Vanguard High Dividend Yield ETF appeared first on InvestorPlace.

Get Yield for Years with the Vanguard High Dividend Yield ETF

Aflac

BHP Billiton

Dominion Energy

General Dynamics

KeyCorp

Kroger

T. Rowe Price Group

Unilever

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iShares Core Dividend Growth ETF

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iShares Select Dividend ETF

First Trust Value Line Dividend Index Fund

iShares Core High Dividend ETF

ProShares S&P 500 Dividend Aristocrats ETF

Schwab US Dividend Equity ETF

SPDR S&P Dividend ETF

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There's absolutely no need to complicate your portfolio or pay high fees when income seekers can just hold dividend-focused VYM stock. The post Vanguard High Dividend Yield ETF Is an Ideal Set-It-and-Forget-It Investment appeared first on InvestorPlace.

Vanguard High Dividend Yield ETF Is an Ideal Set-It-and-Forget-It Investment

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SPDR Portfolio S&P 500 High Dividend ETF

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Verizon

Welcome back to another dividend stock watch list and you can have a sneak peek of the dividend stocks that are on my radar.

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Invesco Senior Loan ETF

iShares U.S. Regional Banks ETF

iShares Russell 2000 Value ETF

Invesco QQQ

Vanguard Total Stock Market ETF

February was really volatile for Wall Street due to rising rate worries. It reminded us of 2013's taper-tantrum.

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iShares iBoxx $ Investment Grade Corporate Bond ETF

Invesco Dynamic Leisure and Entertainment ETF

SPDR Portfolio S&P 500 Value ETF

iShares 20+ Year Treasury Bond ETF

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Invesco DB Commodity Index Tracking Fund

SPDR Gold Trust

Schwab U.S. Large-Cap Growth ETF

Schwab US TIPS ETF

Invesco DB US Dollar Index Bullish Fund

Vaccine distribution and a likely fat federal spending bill under the Biden administration have led to a rise in future economic growth forecasts, which in turn boosted bets over rising inflation.

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Vanguard Growth ETF

This low-fee index fund has averaged annual gains of 16% over the past 10 years.

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Orrstown Financial

AT&T

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Ally Financial

AMC Entertainment

Bed Bath & Beyond

GameStop

Lockheed Martin

T-Mobile US

It's hard imagining an economy without the interjection from the Fed and how much the economy here is relying on them. I currently own 21 shares and wouldn't mind to have a nice, round, 50 shares of Verizon.

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First Trust Dorsey Wright Focus 5 ETF

First Trust Dorsey Wright International Focus 5 ETF

First Trust NASDAQ Cybersecurity ETF

Communication Services Select Sector SPDR Fund

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Con Ed

Intel

MDU Resources Group

Pfizer

J. M. Smucker

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. I make a weekly purchase of 3 shares into the Vanguard High Dividend Yield ETF. There were no special opportunities/large drops in the market, therefore I only bought on Mondays throughout December.

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WisdomTree U.S. LargeCap Dividend Fund

First Trust Morningstar Dividend Leaders Index Fund

FlexShares Quality Dividend Index Fund

Invesco S&P Ultra Dividend Revenue ETF

First Trust Rising Dividend Achievers ETF

ALPS Sector Dividend Dogs ETF

Invesco S&P 500 High Dividend Low Volatility ETF

It has been one year since my article covering 18 dividend-focused ETFs was published and I will be reviewing the performance of the group. The performance data showed only 1 of the 18 dividend-focused ETFs outperformed the S&P 500 since last year.

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iShares Core U.S. Aggregate Bond ETF

iShares Core S&P 500 ETF

Schwab U.S. Small-Cap ETF

SPDR Portfolio Developed World ex-US ETF

Vanguard Mid-Cap ETF

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ALPS Barron's 400 ETF

iShares Global Clean Energy ETF

iShares Russell 2000 Growth ETF

ETFMG Alternative Harvest ETF

AdvisorShares Pure US Cannabis ETF

Invesco WilderHill Clean Energy ETF

Invesco S&P 500 Quality ETF

Vanguard Small-Cap Growth

Vanguard Industrials ETF

Materials Select Sector SPDR Fund

Consumer Discretionary Select Sector SPDR Fund

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News for Vanguard High Dividend Yield ETF ETF (VYM)