There are thousands of dividend-paying stocks in the market, and it can seem overwhelming to many investors to figure out which are the best income investments for their portfolios. If you're looking to create a passive income stream that you don't have to worry about, a dividend-stock index fund could be a better fit for you either in place of or in addition to investing in high-quality dividend stocks individually.
Vanguard High Dividend Yield ETF (VYM 0.95%) has a 2.7% dividend yield. That may not sound like a high yield, but it is more than twice the average of stocks in the S&P 500 (^GSPC 1.10%), which is yielding a little under 1.2%.
The Vanguard High Dividend Yield ETF (VYM) was launched on 11/10/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
The Vanguard High Dividend ETF (VYM) has retreated in the past few days, falling by over 3.2% from its highest level this year. It was trading at $130.78, its lowest level since November this year.
VYM's 2.75% yield is near a 10-year low. Despite the low yield, VYM's capital gains and diversification make it a strong performer. The fund's current yield, PE ratio, and spread versus bonds suggest limited short-term gains, making it a "hold" or a buy below $120.
Exchange-traded funds (ETFs) make investing money to grow your wealth very simple. They require virtually no effort on your part because they are professionally managed investment vehicles.
This article downgraded VYM to HOLD and reiterated my BUY rating on VIG due to changes in their yield and yield spread. On the surface, VYM features higher current dividend yield and lower P/E ratio. However, the VYM-VIG yield spread has become noticeably lower than the historical average, a clear signal in my mind for VIG's more attractive valuation.
When an exchange-traded fund (ETF) puts the words dividend and yield into its name, it is looking to attract a certain type of investor. However, just because an ETF name includes those words does not mean that it is a good yield investment.
The Vanguard High Dividend Yield ETF (VYM) was launched on 11/10/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.
Balancing yield, safety, and growth is crucial for a sustainable retirement income, avoiding pitfalls like insufficient income, dividend cuts, and inflation erosion. Vanguard High Dividend Yield Index Fund ETF Shares is a strong core holding due to its low expense ratio, consistent dividend growth, and diversified, blue-chip portfolio. However, the VYM ETF's yield is a bit too low.
Vanguard's low-fee structure and shareholder ownership model aim to maximize investor returns by minimizing management fees, enhancing long-term compounding benefits. VYM offers a diversified, stable investment option with lower capital gains potential, but greater protection of capital compared to the S&P 500. High liquidity and substantial assets under management make VYM a reliable choice for large trades without significant price impact.
The expectation of interest rate cuts may have fixed income investors wondering if it's necessary to take on more risk with high yield bonds. However, even the risk averse can appreciate a built-in risk mitigation strategy in a fund like the Vanguard High Dividend Yield Index Fund ETF Shares (VYM).