Should Vanguard High Dividend Yield ETF (VYM) Be on Your Investing Radar? (2024)

FAQs

Is Vanguard High Dividend Yield ETF a good investment? ›

Vanguard High Dividend Yield ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

Dividend ETFs may also be a good option for investors who want exposure to a diversified portfolio of dividend-paying stocks but do not have the time or expertise to research and pick individual stocks themselves. However, it's important to note that dividend ETFs are not risk-free investments.

What is VYM's average 12-month price target, according to analysts? Based on analyst ratings, VYM's 12-month average price target is $121.04.

Cons. No guarantee of future dividends. Stock price declines may offset yield. Dividends are taxed in the year they are distributed to shareholders.

Performance: Over the long term, VIG has delivered relatively stable returns, with a focus on dividend growth, while VYM has delivered higher yields but with more volatility.

When is VYM dividend payment date? VYM's next quarterly payment date is on Mar 22, 2023, when VYM shareholders who owned VYM shares before Mar 19, 2023 received a dividend payment of $0.72 per share. Add VYM to your watchlist to be reminded of VYM's next dividend payment.

VYM Dividend Information

VYM has a dividend yield of 3.14% and paid $3.31 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Mar 20, 2023.

Yields from 2% to 6% are generally considered to be a good dividend yield, but there are plenty of factors to consider when deciding if a stock's yield makes it a good investment. Your own investment goals should also play a big role in deciding what a good dividend yield is for you.

In some cases, a high dividend yield can indicate a company in distress. The yield is high because the company's shares have fallen in response to financial troubles. And the high yield may not last for much longer. A company under financial stress could reduce or scrap its dividend in an effort to conserve cash.

What is the downside of high yield dividend stocks? ›

That's because a high yield may signal danger rather than a bargain if it reflects widespread investor skepticism that a company can keep paying its current dividend. Dividend cuts will always undermine investor confidence, and can quickly push down a company's stock price.

VYM's diversified holdings significantly reduce portfolio risk and volatility, and are a significant benefit for the fund and its shareholders. VYM's diversification is such that the fund could function as a core portfolio holding for most investors.

The mutual fund version has a $3,000 minimum initial investment, and a slightly higher 0.15% expense ratio.

ETFs are less volatile than stocks, so they do not give very high returns in a short period and similarly do not fall rigorously like stocks. ETFs are only for those who want slow and steady returns in the long term. For anybody expecting good returns overnight, an ETF is not a good option for you to invest in.

For many retirees, dividend-paying stocks and ETFs provide income without a job. Often, they are for those who do not have time to monitor the market every second. They are suitable long-term investments since payouts are constant.

But not all of the highest dividend stocks are safe. From aggressive payout ratios to risky debt loads and businesses in secular decline, stocks with high dividends require extra research to avoid investing in yield traps.

What is the most diversified ETF Vanguard? ›

VYM is linked to an index consisting of roughly 440 holdings and exposure is tilted most heavily towards consumer, energy, and industrials.

Most of Vanguard's 70-plus ETFs pay dividends. Vanguard ETFs are noted in the industry for their lower-than-average expense ratios. Most of Vanguard's ETF products pay quarterly dividends; some pay annual dividends; and a few pay monthly dividends.

The record date: The date that determines all shareholders of record who are entitled to the dividend payment. This date usually occurs two days after the ex-date. The payment date: This is the day dividend payments are issued to shareholders and is usually about one month after the record date.

(viii) A company which fails to comply with Section 73 and 74 of the Companies Act shall not declare any dividend on its equity shares till such default continues. (x) Dividend has to be paid within 30 days from the date of declaration.

The ex-dividend date for stocks is usually set one business day before the record date. If you purchase a stock on its ex-dividend date or after, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend.

Look for $12,000 Per Year in Dividends

To make $1,000 per month in dividends, it's better to think in annual terms. Companies list their average yield on an annual basis, not based on monthly averages. So you can make much more sense of how much you might earn if you build your numbers around annual goals as well.

Dividend-paying Stocks

Shares of public companies that split profits with shareholders by paying cash dividends yield between 2% and 6% a year. With that in mind, putting $250,000 into low-yielding dividend stocks or $83,333 into high-yielding shares will get your $500 a month.

Payout ratio

After you find this number, divide the total cash paid out in dividends over the past year by your chosen earnings metric for the same time period. Anything over 100% is a bad sign as it means a company is paying out more in dividends than it is generating in earnings.

Is high dividend yield good for long term? ›

In addition to providing consistent income, many dividend-paying stocks are in defensive sectors that can weather economic downturns with reduced volatility. Dividend-paying companies also have substantial amounts of cash, and therefore, are usually strong companies with good prospects for long-term performance.

Because of that, dividend stocks are a great fit for almost every investor; they can help you make a diversified, wealth-building portfolio. There are a few dividend strategies to consider. The first is to build a dividend portfolio as part of your overall portfolio.

However, dividend yields can be misleading on their own. Some companies pay out dividends even when they are operating at a short-term loss. Others may pay out dividends too aggressively, failing to reinvest enough capital into their business to maintain profitability down the road.

You may find dividend stocks suitable if you seek stocks with lesser risk, steady returns, and immediate benefits. In contrast, growth stocks may be suitable if you want greater returns over the years and can stomach the volatility and risk coming along.

The dividend yield measures how much income has been received relative to the share price; a higher yield is more attractive, while a lower yield can make a stock seem less competitive relative to its industry.

Some of the advantages of dividend stocks are that they tend to outperform growth stocks, offer consistent cash flow at regular intervals, and because stocks that offer dividends typically indicate that a company is financially healthy enough to pay shareholders cash, the investment can be less risky.

To live off of dividend income alone, you need to receive enough dividend payments each year to cover your expenses. Once you know how much income you need to cover your expenses, you can divide that by the average dividend yield of your portfolio to get a rough estimate of how much you need to invest.

It's prudent to focus on long-run total return, rather than income only. Dividends -- either reinvested or taken in cash -- lead to a higher tax bill. Dividend-paying stocks carry unsystematic risk, which could otherwise be diversified away.

VYM - Volatility Comparison. The current volatility for Vanguard S&P 500 ETF (VOO) is 3.36%, while Vanguard High Dividend Yield ETF (VYM) has a volatility of 3.71%. This indicates that VOO experiences smaller price fluctuations and is considered to be less risky than VYM based on this measure.

VYM - Performance Comparison. In the year-to-date period, VTV achieves a -2.98% return, which is significantly lower than VYM's -5.07% return. Both investments have delivered pretty close results over the past 10 years, with VTV having a 9.80% annualized return and VYM not far behind at 9.39%.

What are the top 5 holdings in Vanguard? ›

Vanguard High Dividend Yield ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VYM is an outstanding option for investors seeking exposure to the Style Box - Large Cap Value segment of the market.

VYM has been and remains poised to be a solid pick for investors who have a large retirement fund and are looking for a low-stress, low-cost, and low-time commitment way to fund their retirements while also preserving principal over the long-term for their heirs.

Vanguard is best suited for beginner and seasoned investors alike who are seeking access to an array of low-cost vast mutual fund and ETF offerings, all packaged into a simple-to-use brokerage platform.

Vanguard High Dividend Yield Index ETF (VYM)

VYM has a dividend yield of 3.14% and paid $3.31 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Mar 20, 2023.

A high dividend yield can be appealing since you're getting more income per dollar invested, but a high yield isn't always a positive thing. It could mean that the company's stock price has been falling or dividend payments have been increasing at a higher rate than the company's earnings.

What is the management fee for VYM? ›

As is consistent with other Vanguard funds, VYM commands an inexpensive management fee. The fund currently charges a 0.06% expense ratio, one of the cheapest on the market.

These dividends are paid on stock held by the ETF, which must own them for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.

The IRS taxes dividends and interest payments from ETFs just like income from the underlying stocks or bonds, with the income being reported on your 1099 statement. Profits on ETFs sold at a gain are taxed like the underlying stocks or bonds as well.

Dividend ETFs or Dividend Stocks: Which Is Better? Dividend ETFs can be a good option for investors looking for a low-cost, diversified and reliable source of income from their investments. Dividend stocks may be a better option for investors who prefer to choose their own investments.

Taxable income

Dividend stocks produce taxable income unless you're holding them within a tax-advantaged account like an IRA or a 401(k). If you don't have an account that defers taxes on earnings, you will pay taxes annually on the dividends you receive. This is true even if you reinvest those dividends.

Understanding three key characteristics of these funds can help investors make more-informed choices. These include dividend yield, dividend growth, and dividend durability. Dividend Yield A fund's current dividend yield is often the first metric investors look at when shopping for equity-income opportunities.