Investors evaluating Vanguard’s dividend-focused ETFs face a strategic choice between VYM and VIG, each with distinct yield profiles, sector exposures, and historical performance. The decision hinges on risk tolerance, income goals, and portfolio alignment.
- VYM offers a 3.8% trailing yield versus VIG’s 1.9%.
- VYM’s 10-year annualized return is 9.6%, compared to VIG’s 8.9%.
- VYM has a higher three-year standard deviation (14.7%) than VIG (12.3%).
- VYM’s top sectors include financials (22%) and energy (17%), while VIG favors consumer staples (25%) and healthcare (20%).
- VYM holds $14.2 billion in AUM, VIG holds $11.8 billion.
- Both ETFs maintain expense ratios below 0.1%.
The debate between Vanguard High Dividend Yield (VYM) and Vanguard Dividend Appreciation (VIG) centers on contrasting investment philosophies. VYM targets higher current yield by focusing on large-cap stocks with historically strong payouts, while VIG emphasizes consistent dividend growth through companies with a proven track record of increasing distributions. As of recent data, VYM offers a trailing yield of 3.8%, compared to VIG’s 1.9%, reflecting its focus on income over growth. However, this yield premium comes with higher volatility; VYM has shown a three-year standard deviation of 14.7% versus VIG’s 12.3%. Over the past decade, VYM has delivered an annualized return of 9.6%, slightly outpacing VIG’s 8.9%, though both have significantly exceeded the S&P 500’s 8.3% average during the same period. This performance gap is partly attributable to VYM’s heavier allocation to sectors like financials (22%) and energy (17%), which have historically offered elevated yields but also greater cyclical risk. In contrast, VIG’s top holdings—such as consumer staples (25%) and healthcare (20%)—reflect a more defensive, growth-oriented approach aimed at long-term compounding. ETF assets under management further underscore their differing strategies: VYM holds $14.2 billion in AUM, making it one of Vanguard’s largest equity ETFs, while VIG manages $11.8 billion. Both maintain low expense ratios—VYM at 0.07% and VIG at 0.09%—offering cost-efficient access to dividend exposure. Investors seeking immediate income may favor VYM, particularly in rising interest rate environments where high-yield equities can outperform bonds. Conversely, those prioritizing sustainable growth and capital preservation may find VIG better aligned with long-term wealth accumulation goals. Market impact remains moderate, as neither ETF commands dominant influence across broad indices. However, changes in their relative performance could signal shifts in investor sentiment toward yield versus growth. Institutions and retail investors alike should consider these ETFs not as standalone picks but as components within diversified portfolios, with asset allocation decisions guided by time horizon, risk capacity, and macroeconomic outlook.