What VYM actually is

VYM is Vanguard’s ETF for US stocks with higher-than-average dividends. It follows an index of common stocks of companies that pay dividends that are generally above average, and the index excludes real estate investment trusts (REITs). It invests at least 80% of its assets in those stocks.

It launched in 2006 and is one of the largest dividend-focused ETFs.

What is inside

Because the index is broad, VYM holds a large number of companies, mostly established, large businesses in sectors such as financials, healthcare, consumer staples, energy and industrials. Weighting follows company size, so the biggest dividend payers have the largest weights.

Unlike a quality-screened fund, it focuses on yield and does not try to filter hard for dividend growth or financial strength.

Distributions

VYM passes on the dividends of its holdings to shareholders regularly. Its yield is typically above that of a broad market fund. Check the fund’s current yield, fees and distribution schedule on the issuer’s website, because they change.

What to keep in mind

  • Yield first. Some high payers are high because their prices have fallen.
  • Sector concentration. Financials, energy and healthcare can carry large weights.
  • No REITs. Real estate exposure is excluded on purpose.
  • Growth. Dividend growth and price growth can be lower than in a growth-oriented fund.

Quick take

VYM is a simple, broad way to hold above-average US dividend payers. See how it compares with SCHD and VIG on our comparison page.