When it comes to investing in dividend ETFs, Vanguard offers a variety of options to choose from. Two popular choices among investors are the Vanguard High Dividend Yield ETF (VYM) and the Vanguard Dividend Appreciation ETF (VIG). Both ETFs provide exposure to dividend-paying companies, but they have some key differences that may make one more suitable for your investment goals than the other.
The Vanguard High Dividend Yield ETF (VYM) focuses on companies with high dividend yields, making it a good option for investors seeking current income. The ETF tracks the performance of the FTSE High Dividend Yield Index, which includes companies that have a history of paying above-average dividends. VYM has a relatively low expense ratio of 0.06% and holds over 400 stocks in its portfolio.
On the other hand, the Vanguard Dividend Appreciation ETF (VIG) is designed for investors looking for companies with a history of consistently increasing their dividends over time. The ETF tracks the performance of the NASDAQ US Dividend Achievers Select Index, which includes companies that have increased their dividends for at least 10 consecutive years. VIG has a slightly higher expense ratio of 0.08% but offers exposure to companies with strong dividend growth potential.
Ultimately, the choice between VYM and VIG will depend on your investment objectives and risk tolerance. If you prioritize current income and are comfortable with potentially higher volatility, VYM may be the better option for you. On the other hand, if you prefer a more conservative approach and value companies with a track record of dividend growth, VIG could be the right choice.
Both VYM and VIG are solid options for investors looking to add dividend-paying stocks to their portfolio. Consider your investment goals and risk tolerance when deciding which ETF is the best fit for you.