June 26, 2016

There's Value in This High-Dividend ETF

This low-cost exchange-traded fund offers an attractive yield while diversifying risk.



Vanguard High Dividend Yield ETF (VYM) is a compelling option for exposure to stocks with generous dividend payments. It offers both an attractive dividend yield without taking excessive risk and a sizable cost advantage relative to its peers (0.09% expense ratio). The strategy starts with all U.S. dividend payers (excluding REITs and smaller stocks), targets those representing the higher-yielding half, and weights them by market capitalization, which keeps implementation costs low. This creates a portfolio of more than 400 names that leans toward mature giants such as  Microsoft (MSFT),  Johnson & Johnson (JNJ), and  AT&T (T). Most of these firms are growing more slowly than the broad market, giving the fund a value orientation.



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