Exploring VYM: A Deep Dive into ETFs, Dividends, and High Yield Index Funds

Author Image By Michael D Ashley

VYM - Market Position

Ticker Symbol Product Type Asset Class Strategy Payment Frequency Geographic Focus Expense Ratio Sponsor
VYM ETF Equity Dividend ETF High Dividend Yield Quarterly US
0.06% Vanguard

VYM Overview - Vanguard High Dividend Yield Index Fund ETF

The Vanguard High Dividend Yield ETF (VYM) is an exchange-traded fund (ETF) offered by Vanguard, one of the world's largest investment management companies. VYM is designed to track the performance of the FTSE High Dividend Yield Index, which consists of high dividend-paying U.S. companies.

VYM aims to provide investors with exposure to a diversified portfolio of dividend-paying stocks while seeking to maintain a relatively low expense ratio. The ETF primarily invests in stocks of companies that have a history of paying dividends and focuses on those with higher-than-average dividend yields compared to the broader market.

Investing in VYM offers several potential benefits. Firstly, it provides investors with the opportunity to earn regular income through dividend distributions, which can be attractive for those seeking steady cash flow from their investments. Additionally, VYM's focus on high dividend-paying stocks may offer some degree of downside protection during market downturns, as these companies often demonstrate financial stability and resilience.

Overall, VYM is suitable for investors looking to add income-generating assets to their portfolio, benefit from the potential for capital appreciation through stock price growth, and achieve diversification within the U.S. equity market.

VYM - Price / Yield

VYM - Portfolio and Asset Allocation

The Vanguard High Dividend Yield ETF (VYM) boasts a diversified portfolio comprising various top holdings, each contributing significantly to its asset allocation. Notably, VYM's top holdings include JPMorgan Chase & Co. (JPM), Broadcom Inc. (AVGO), Exxon Mobil Corp. (XOM), Home Depot (HD), and Johnson & Johnson (JNJ), among others. These holdings span across sectors such as Financials, Healthcare, Industrials, and Technology, reflecting a balanced exposure to different segments of the market.

Examining VYM's portfolio performance, one can observe a mix of Strong Buy and Moderate Buy recommendations for its holdings, indicating market confidence and potential for growth. The ETF's focus on high dividend-paying stocks aligns with its objective of providing investors with a steady income stream while seeking capital appreciation.

Furthermore, VYM's expense ratio remains relatively low, making it an attractive option for investors seeking cost-effective exposure to dividend-yielding equities. Overall, VYM's holdings and portfolio composition reflect a strategic approach towards income generation, diversification, and potential long-term growth within the equity market.

Top 10 Holdings

As of April 29, 2024, the top 10 holdings of the Vanguard High Dividend Yield Index Fund ETF (VYM) are:

Name Weight
JPMorgan Chase & Co. (JPM) 3.44%
Broadcom Inc. (AVGO) 3.40%
Exxon Mobil Corp. (XOM) 2.76%
Home Depot (HD) 2.28%
Johnson & Johnson (JNJ) 2.27%
Procter & Gamble Company (PG) 2.27%
Merck & Company (MRK) 1.99%
Abbvie (ABBV) 1.91%
Chevron (CVX) 1.56%
Bank of America (BAC) 1.55%

Asset Allocation

The Vanguard High Dividend Yield Index Fund ETF (VYM) has the following asset allocation as of April 29, 2024:

Sector Weight
Financial 20.59%
Healthcare 13.05%
Industrials 12.61%
Consumer Defensive 11.99%
Technology 11.25%
Energy 10.62%
Consumer Cyclical 8.08%
Utilities 5.89%
Communication Services 3.26%
Basic Materials 2.60%
Industrial Goods 0.03%
Real Estate 0.02%

Dividend Yield and Distribution History

Section Details

VYM Dividend Data

The Vanguard High Dividend Yield ETF (VYM) pays quarterly dividends. The most recent ex-dividend date was on April 15, 2024, with a dividend payment of $0.679 per share on April 30, 2024.

VYM Dividend Yield

As of April 30, 2024, the 30-day SEC yield for VYM is 2.91%. This means that for every $100 invested in the fund, investors would receive $2.91 in dividends per year, assuming the yield remains constant.

VYM Dividend History

VYM has a history of paying quarterly dividends. The dividend payments may fluctuate based on the performance of the underlying dividend-paying stocks held by the fund.

VYM Dividend Growth

VYM's dividend payments are dependent on the dividend growth and performance of the underlying stocks in the fund's portfolio. The fund's investment strategy focuses on companies with a history of consistent dividend growth, which may contribute to increasing dividend payments over time. However, dividend growth is not guaranteed.

VYM Dividend Stability

VYM aims to provide a relatively stable income stream by investing in high-quality, dividend-paying stocks of larger U.S. companies. However, the dividend payments are not guaranteed and may be affected by changes in market conditions or the performance of the underlying stocks in the fund's portfolio.

VYM - Chart

VYM - Comparative Analysis

Let's compare VYM with prominent competitors, focusing on key aspects like performance, fees, and strategy: (as of Apr 2024)

Investment Focus High-yielding, large-cap U.S. stocks High-quality, dividend-paying stocks of larger U.S. companies High-dividend-yielding, large-cap U.S. stocks
Current Yield 2.91% 1.54% 3.35%
Expense Ratio 0.06% 0.33% 0.08%
Investment Strategy Passively tracks the FTSE High Dividend Yield Index Actively managed, focuses on attractively valued companies with consistent dividend growth potential Passively tracks the Morningstar Dividend Yield Focus Index
Strengths Low expense ratio, broad exposure to high-yield U.S. stocks Potential for higher returns through active management, emphasis on dividend consistency and growth Higher yield than VYM and CGDV, low expense ratio
Weaknesses Less emphasis on dividend growth, potentially lower returns than actively managed funds Higher expense ratio than passively managed funds, potentially higher volatility Less diversification than broader dividend ETFs, potentially higher volatility

Dividend History (Last 5 distributions)

Ex-Dividend Date Cash Amount Record Date Pay Date
Mar 14, 2024 $0.66 Mar 17, 2024 Mar 19, 2024
Dec 17, 2023 $1.10 Dec 18, 2023 Dec 20, 2023
Sep 18, 2023 $0.78 Sep 19, 2023 Sep 21, 2023
Jun 20, 2023 $0.88 Jun 21, 2023 Jun 23, 2023
Mar 19, 2023 $0.72 Mar 20, 2023 Mar 22, 2023


Technical Analysis

Additional Information and Risks

As we wrap up our exploration of VYM and its associated ETFs, it's important to note the potential benefits and risks involved. VYM, tracking the Vanguard High Dividend Yield Index, offers investors exposure to high dividend-paying stocks, providing potential for income generation and long-term growth. However, like any investment, there are inherent risks.

Risks to consider:

  • Volatility: Stock market fluctuations can impact the value of ETF shares, leading to potential gains or losses.
  • Stock Market Risk: Changes in market conditions can influence the performance of VYM and its holdings.
  • Asset Concentration: VYM's focus on dividend-paying stocks may lead to concentration in certain sectors or companies, increasing risk.
  • Investment Style Risk: The fund's investment style, characterized by high dividend yields, may not always align with market trends.

It's essential for investors to conduct thorough research, assess their risk tolerance, and diversify their portfolio to mitigate potential downsides. While VYM can be a valuable addition to an investment strategy, understanding the associated risks is crucial for informed decision-making.