Vanguard High Dividend Yield ETF

VYM

Market cap $78.5B

The Vanguard High Dividend Yield Index Fund ETF Shares (NYSEARCA:VYM | VYM Price Prediction) is one of the simplest income vehicles in the market: it owns roughly 500 U.S.

I think VYM is a compelling tool for derisking and diversifying away from tech-heavy indices like the S&P 500. VYM's methodology selects non-hyped, shareholder-oriented large and mid-cap stocks, avoiding the 'Magnificent 7' and speculative sectors, with ~17% tech exposure. Despite its 'high yield' label, VYM's ~2.2% yield is subpar for income seekers; its strength lies in efficient, low-cost diversification and an unexpected tax efficiency in regard to dividends.

The Vanguard High Dividend Yield ETF is one of the most popular dividend ETFs in the marketplace. Its lax selection strategy means the fund owns more than 600 stocks and yields a modest 2.3% currently.

Trading volumes tend to decline in the summer as people take vacations and get out of the office. History shows that the summer months often feature below-average returns and downside risk catalysts.

The Vanguard High Dividend Yield ETF (NYSEARCA:VYM | VYM Price Prediction) addresses a specific retirement problem: drawing income from stocks without concentrating the outcome in any one company.

There is an old saying in investing that a portfolio is like a bar of soap: the more you touch it, the smaller it gets.

Vanguard High Dividend Yield ETF offers a lower expense ratio but has a lower trailing-12-month dividend yield than iShares Core High Dividend ETF. iShares Core High Dividend ETF maintains a more concentrated portfolio of 74 holdings, while Vanguard High Dividend Yield ETF holds more than 600 securities.

This is the dividend growth lane.

Vanguard High Dividend Yield ETF offers a lower expense ratio and larger assets under management than Fidelity High Dividend ETF. Fidelity High Dividend ETF leans significantly into technology and has generated higher five-year total growth.

A retiree holding $200,000 of Vanguard High Dividend Yield ETF (NYSEARCA:VYM | VYM Price Prediction) collects roughly $5,800 in annual income at the fund's 2.9% distribution yield, with no rebalancing and no concentration risk to monitor.