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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