Dividend stocks offer a mix of cash flow and potential gains, but it’s quite cumbersome to manage a bunch of individual picks. That’s what many people gravitate toward brand dividend ETFs, and Vanguard is one of the best ETF providers in the industry.
The financial giant is known for passively managed funds that have low expense ratios. Out of the three dividend-focused ETFs on this list, the highest expense ratio is 0.17%. The other two funds both have expense ratios under 0.10%. However, low expense ratios aren’t the only thing that sets these dividend ETFs apart from the competition. Here’s what you should know about Vanguard’s top dividend ETFs.
Vanguard Dividend Appreciation Index Fund ETF
The Vanguard Dividend Appreciation Index Fund ETF (NYSEARCA:VIG | VIG Price Prediction) focuses on dividend stocks with moderate yields and high dividend growth rates. Its top holding, Broadcom (NASDAQ:AVGO), is a good example of what to expect. The stock has an 0.81% yield and is up by almost 600% over the past five years. Broadcom also raised its dividend by 10% year-over-year to wrap up fiscal 2025, and it has a long history of high dividend hikes. It’s a low yield now, but reinvestments and dividend growth suggest the cash flow will be more attractive in a few years, and you also get long-term gains.
Not all stocks in the fund are as extreme as Broadcom. The fund has a more reasonable 1.59% yield and a 0.05% expense ratio. It has produced an annualized 13.8% return over the past decade while holding more than 300 stocks. The top 10 holdings make up more than one-third of the entire portfolio. Large-cap dividend stocks make up the majority of the stock’s total assets.
Vanguard High Dividend Yield Index Fund ETF
The Vanguard High Dividend Yield Index Fund ETF (NYSEARCA:VYM) prioritizes high-yield dividend stocks, which explains the 2.45% yield. It only comes with a 0.06% expense ratio, ensuring that you keep most of the cash flow. Just like VIG, this Vanguard dividend ETF also places a strong emphasis on large-cap stocks.
Less than 10% of its holdings are in small-cap stocks, and it also only has 10% of its holdings in growth stocks. It’s heavily concentrated in dividend value stocks, with Broadcom, JPMorgan (NYSE:JPM), and Exxon Mobil (NYSE:XOM) as the top three holdings.
The fund is well-diversified with more than 500 holdings, and its top 10 positions only make up 27% of the fund’s total assets. Financial and tech stocks make up almost 40% of the fund’s entire portfolio.
Vanguard International High Dividend Yield Index Fund ETF
The Vanguard International High Dividend Yield Index Fund ETF (NASDAQ:VYMI) follows the same concept as VYM but applies it to international dividend stocks. It has a 0.17% expense ratio, but a 3.49% yield is more than enough to cover fees. It has also delivered an annualized 14.1% return over the past five years.
VYMI does not hold any small-cap stocks and puts almost 90% of its assets in large-cap companies. It has more than 1,500 holdings, with the top 10 picks only making up 14% of the total assets. This type of diversification is hard to find in an ETF, and it exposes investors to international growth opportunities instead of just relying on domestic catalysts.
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