I have a soft spot for both the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) and the Vanguard High Dividend Yield ETF (NYSEMKT: VYM). A big part of that comes down to fees. After some recent cuts, both now charge just 0.04% a year. On a $10,000 investment, that’s about $4 annually, which goes a long way in preserving both yield and total return over time.
But both of these ETFs focus exclusively on U.S. stocks. If your goal is to diversify internationally, holding VIG and VYM alone won’t get you there, no matter how low cost they are. Fortunately, Vanguard offers two clean complements that pair almost perfectly with them.
Think of these as international counterparts that follow similar philosophies, just applied outside the U.S. Here’s how they work and what you’re actually getting.
VIG’s international counterpart
Up first is the Vanguard International Dividend Appreciation ETF (NASDAQ: VIGI). This ETF tracks the S&P Global ex-U.S. Dividend Growers Index. It pulls from both developed and emerging markets and requires a minimum of seven consecutive years of dividend growth.
Like VIG, it excludes real estate investment trusts and removes the top 25% highest-yielding stocks. That helps filter out companies with weak fundamentals or unsustainably high payouts. The remaining stocks are then weighted by market capitalization, with a 4% cap on individual positions to limit concentration.
Right now, the portfolio holds about 350 stocks. On average, these companies are growing earnings at around 12%, trading at a reasonable 19.3 times earnings, and generating a 13.1% return on equity. So you are still getting a quality tilt here, just applied globally.
It is slightly more expensive than its U.S. counterpart at a 0.07% expense ratio, but that is still very affordable for international exposure. Over the last 10 years, it has returned 7.63% annualized. That lag reflects the broader reality that international equities have trailed the U.S. over the past decade, not necessarily a flaw in the strategy itself.
VYM’s international counterpart
On the higher-yield side, the counterpart to VYM is the Vanguard International High Dividend Yield ETF (NASDAQ: VYMI). This ETF tracks the FTSE All-World ex-U.S. High Dividend Yield Index. Like VIGI, it charges a 0.07% expense ratio, which is still very competitive given the breadth of exposure.
The methodology is straightforward. It starts with a broad universe of international developed and emerging market stocks, selects the top half based on forecasted 12-month dividend yield, excludes REITs, and then weights the rest by market capitalization.
Compared to VIGI, this results in a portfolio with slightly lower earnings growth, around 11%, but a much cheaper valuation at 13.6 times earnings. Despite the lower valuation, quality remains solid, with return on equity still around 13%.
The sector mix also shifts. You tend to see more exposure to financials, energy, and other value-oriented sectors relative to a dividend growth approach. That tilt has helped historically. Over the last 10 years, VYMI has returned 10.14% annualized, outperforming VIGI largely because value stocks have held up better outside the U.S.
How to Use VIGI and VYMI
One simple way to put all of this together is to just own all four ETFs. If I wanted to keep things very straightforward, I would build a portfolio with 25% each. That gives you exposure to both dividend growth and high yield across U.S. and international markets in one clean package.
The weighted average expense ratio comes out to roughly 0.055%, which is still extremely low for a globally diversified dividend portfolio. It’s not the most optimized setup, but it is simple, balanced, and gets the job done without overthinking it.
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