Complete VYM Dividend Investment Guide 2025
Pursue stable dividend growth with Vanguard High Dividend Yield ETF 🚀
VYM ETF is a flagship high-dividend ETF offered by Vanguard that invests in US large-cap stocks with above-average dividend yields, providing long-term dividend growth and capital appreciation.
Use our calculator to predict your future dividend income and develop your investment strategy.
- - Current NAV: $127.79 (as of February 28, 2025)
- - 12-month trailing dividend yield: approximately 3.0%
- - Total assets under management: $73 billion
- - Expense ratio: 0.06%
- - Year-to-date return (YTD): 17.60%
💡 Note: VYM pays dividends quarterly, typically in March, June, September, and December. As a dividend growth ETF, it features increasing dividend payouts over time, making it attractive for long-term investors.
VYM (Vanguard High Dividend Yield ETF) is a popular ETF among dividend investors. It invests in high-quality U.S. companies that pay above-average dividends, providing stable income and long-term capital growth.
VYM Analysis Tools
Check detailed information about VYM's dividend history and yield trends. Successful dividend investing starts with accurate information.
VYM Portfolio Analysis
Check holdings, sector allocations, and financial metrics
VYM Dividend History & Yield
Complete dividend records, annual payouts, and yield trends
VYM Investment Tips
On the dividend information page, you can check VYM's complete dividend history, payout growth trends, and real-time yields. You can also see the upcoming ex-dividend dates and payment dates through the dividend calendar. If you're planning to reinvest dividends, analyzing stock price patterns around ex-dividend dates can be helpful.
1. What is VYM ETF?
VYM is an ETF launched by Vanguard in November 2006 that tracks the FTSE High Dividend Yield Index. This index consists of stocks of companies that pay dividends that are generally higher than average (excluding real estate investment trusts or REITs). VYM seeks to provide a balanced approach of dividend income along with potential for capital appreciation.
Key Features
2. Understanding VYM's Investment Strategy
2-1. Portfolio Composition
VYM invests in companies with high dividend yields in the U.S. market. It includes various dividend-friendly companies across sectors like financials, healthcare, consumer goods, and energy. The large-cap focused portfolio provides stability and reliability.
Top Holdings (Major Portfolio Weight) - As of March 31, 2025
Sector Allocation (As of February 2025)
21.7%
11.7%
12.6%
10.7%
9.8%
9.6%
7.2%
16.7%
Diversified portfolio with 544 total holdings
3. VYM Dividend Characteristics
VYM's dividends are stable and feature growth characteristics. Dividends are paid quarterly, and long-term dividend growth is a key feature of this ETF.
VYM's Dividend Growth Profile
Dividend Yield Comparison by Asset
Source: Vanguard, as of February 2025
VYM Annual Dividend Trend
VYM's annual dividend per share over the last 5 years:
| Year | Dividend Per Share ($) | YoY Growth (%) | Yield (%) |
|---|---|---|---|
| 2020 | $2.87 | -2.4% | 3.5% |
| 2021 | $2.97 | 3.5% | 3.0% |
| 2022 | $3.22 | 8.4% | 3.1% |
| 2023 | $3.35 | 4.0% | 3.2% |
| 2024 | $3.63 | 8.4% | 3.0% |
| 5-Year Average | - | 4.4% | 3.2% |
* Yield is calculated as a percentage of average share price for the year.
* Source: Vanguard official data (as of February 2025)
Advantages of VYM's Dividend Growth
- • VYM's dividends increase over time, making it advantageous for long-term investors.
- • Holding for 10+ years maximizes the compounding effect of dividend growth.
- • Dividend growth helps offset inflation during periods of rising prices.
- • Quarterly dividends provide regular cash flow, increasing reinvestment opportunities.
4. Considerations When Investing in VYM
Advantages
- ✓Stable and consistently growing dividends
- ✓Low expense ratio (0.06%) for cost efficiency
- ✓Diversified investments in large-cap quality stocks
- ✓Over 15 years of proven operating history
- ✓Inflation hedging potential
Disadvantages
- •Lower current yield compared to monthly dividend ETFs
- •Limited monthly cash flow due to quarterly dividends
- •Price volatility in certain market conditions
- •Not suitable for investors seeking high short-term returns
- •Lacks exposure to some growth-oriented sectors
5. VYM Performance Analysis
Historical Performance
| Year | Total Return (%) | Dividend Yield (%) | S&P 500 Return (%) |
|---|---|---|---|
| 2020 | -8.17% | 3.5% | 18.4% |
| 2021 | 40.55% | 3.0% | 28.7% |
| 2022 | 1.18% | 3.1% | -18.1% |
| 2023 | -2.54% | 3.2% | 26.3% |
| 2024 | 31.15% | 3.0% | 23.9% |
| 2025 (YTD) | 2.63% | 0.6% | 3.12% |
Source: Vanguard official data (as of February 28, 2025)
VYM Performance in Different Market Conditions
VYM shows differentiated performance in the following market scenarios:
Defensive in Down Markets
In 2022, when the S&P 500 fell 18.1%, VYM gained 1.18%, demonstrating excellent defense. Dividend stocks generally show relative strength during market downturns.
Long-term Value Creation
VYM shows excellent performance in creating long-term value through the compounding effect when held for 10+ years. Dividend reinvestment has a significant impact on long-term performance.
Relatively Weak in Rapid Bull Markets
In 2023, when the S&P 500 rose 26.3%, VYM fell 2.54%. It may show relatively poor performance in tech-driven bull markets.
Key Implications
- Defensive characteristics in down markets contribute to portfolio stability
- Quarterly dividends and long-term dividend growth create stable income
- Dividend reinvestment strategy significantly impacts long-term returns
- Combining with other growth-oriented ETFs can be effective in tech-driven bull markets
6. Comparison with Other Dividend ETFs
Popular Dividend ETF Comparison
| Feature | VYM | SCHD | JEPI | QYLD |
|---|---|---|---|---|
| Underlying Index | FTSE High Dividend Yield | Dow Jones U.S. Dividend 100 | S&P 500 | Nasdaq 100 |
| Investment Strategy | High-yield stock investment | Dividend growth stocks | ELN + OTM covered calls | ATM covered calls |
| Dividend Yield | 3.0% | 3.6% | 7~9% | 14.2% |
| Dividend Frequency | Quarterly | Quarterly | Monthly | Monthly |
| Growth Potential | Medium-High | High | Medium | Limited |
| Expense Ratio | 0.06% | 0.06% | 0.35% | 0.60% |
| Launch Year | 2006 | 2011 | 2020 | 2013 |
Considerations When Choosing ETFs
7. Frequently Asked Questions
Which is better, VYM or SCHD?
Both ETFs are excellent dividend ETFs but have some differences. VYM provides broader market exposure with more holdings (544 stocks), while SCHD focuses on fewer stocks (about 100) with a higher quality dividend growth profile. Over the past 10 years, SCHD has shown slightly better performance, but VYM has demonstrated lower volatility. If you prioritize long-term capital growth, SCHD might be more suitable, while VYM might be better if you prioritize stability and diversification. Many investors choose to hold both ETFs together as part of a balanced strategy.
How are VYM dividends taxed?
VYM's dividends are generally classified as qualified dividends, which are taxed at a lower rate than ordinary income. In the United States, these rates are 0%, 15%, or 20%, depending on your tax bracket. For international investors, a 15% withholding tax is typically applied by the U.S., and additional taxes may be levied in your home country. Exact tax treatment varies based on residency and individual circumstances, so consulting with a tax professional is recommended.
Why invest in VYM when QYLD or JEPI offer higher dividend yields?
While VYM's current yield (about 3%) is lower than QYLD (about 14%) or JEPI (about 8%), there are important long-term differences to consider. VYM features dividend growth characteristics, meaning its dividends consistently increase over time. It also offers greater potential for capital appreciation, which can lead to higher total returns (dividends + capital gains) over the long term. QYLD and JEPI provide higher current income but may have limited capital growth potential. For long-term investors, using VYM or similar dividend growth ETFs as a portfolio foundation and adding high-yield ETFs as needed can be an effective strategy.
Is VYM suitable for long-term investment?
VYM is very well-suited for long-term investment. Its dividend growth and capital appreciation characteristics help maximize the compounding effect over time. With a diverse portfolio centered on large-cap quality stocks, it offers resilience against market volatility. If you adopt a dividend reinvestment strategy, your number of shares will increase over time, creating a virtuous cycle of growing dividend income. VYM is an excellent choice for investors with long-term financial goals and those seeking stable income generation.
What is the optimal strategy for investing in VYM?
There are several effective strategies for VYM investment. First, a dividend reinvestment (DRIP) strategy maximizes the long-term compounding effect. Second, dollar-cost averaging (investing a fixed amount regularly) helps utilize market volatility and lower your average purchase price. Third, a balanced approach that uses VYM as a stable foundation and combines it with other dividend growth ETFs like SCHD or high-yield ETFs like JEPI is also a good strategy. Additionally, holding VYM in tax-advantaged accounts (e.g., IRAs, 401(k)s) can be considered for tax efficiency.
8. Conclusion and Investment Strategies
Who is VYM Suitable For?
Suitable Investor Types:
- Investors seeking both long-term capital growth and dividend income
- People investing for retirement or long-term financial goals
- Investors wanting defensive portfolios during market downturns
- Those looking to maximize compound effects by reinvesting dividends
- Investors who prefer ETFs with low expense ratios
Consider Carefully If You Are:
- An investor who absolutely needs high current income (consider JEPI or QYLD)
- Someone who needs monthly dividend income (consider monthly dividend ETFs)
- A short-term investor seeking ultra-high growth
- An investor focusing on tech-driven growth sectors
Effective VYM Utilization Strategies:
- Long-term Holding and Dividend Reinvestment: Maximize compounding effect by reinvesting dividends
- Regular Additional Investment: Use dollar-cost averaging to leverage market volatility
- Balanced Portfolio Construction: Use VYM and SCHD as a foundation, adding high-yield ETFs (JEPI, QYLD) as needed
- Tax-Efficient Account Utilization: Hold VYM in tax-advantaged accounts to minimize dividend taxes
- Market Correction Buying Opportunities: Add more shares during market downturns to lower average purchase price