Our Rating: ★★★★☆ (4/5)
Best For: Long-term investors who want diversified, low-cost U.S. dividend exposure in one fund
Not Ideal For: Investors who prioritize dividend growth, a very high current yield, or minimal exposure to financial stocks
Expense Ratio: 0.04%
Our Take: VYM combines one of the lowest fees in the category with a broad portfolio of roughly 600 large-cap dividend payers. Its yield is moderate rather than high, and its largest sector weighting is financials, which investors should weigh against their existing holdings.
Table of Contents
What Is the Vanguard High Dividend Yield ETF (VYM)?
If you are asking what is VYM ETF, it is the Vanguard High Dividend Yield ETF, an exchange-traded fund issued by Vanguard that launched on November 10, 2006. It is structured as an open-end fund and tracks the FTSE High Dividend Yield Index, which targets U.S. companies that pay above-average dividends.
Rather than selecting individual stocks, VYM holds roughly 600 of them in proportion to the index. The result is broad exposure to large, established dividend payers across most sectors of the U.S. economy. The fund distributes income quarterly and charges an expense ratio of 0.04%, which works out to about $4 per year for every $10,000 invested. With roughly $95.8 billion in assets, VYM is one of the largest dividend-focused ETFs available to U.S. investors.
VYM ETF Key Facts
| Item | Detail |
|---|---|
| Full name | Vanguard High Dividend Yield ETF |
| Ticker | VYM |
| Issuer | Vanguard |
| Index | FTSE High Dividend Yield Index |
| Inception date | Nov 10, 2006 |
| Expense ratio | 0.04% |
| AUM | ~$95.8 billion |
| Average volume | ~1.15 million shares/day |
| Dividend yield | ~2.37% |
| Dividend frequency | Quarterly |
| Structure | Open-end fund |
VYM ETF Performance
VYM has delivered double-digit annualized returns over most long-term periods. Vanguard reported NAV returns of 21.5% for the one-year period, 17.4% annualized over three years, 11.8% over five years and 11.6% over ten years, all as of June 30, 2026. Yahoo Finance showed a one-year market return of 15.9% and a three-year annualized return of 18.9% as of October 9, 2026. The gap between the two one-year figures reflects different measurement dates, so readers should compare like with like.
| Period | VYM | FTSE High Dividend Yield Index |
|---|---|---|
| 1 year | +15.9% | +16.6% |
| 3 years (annualized) | +18.9% | +19.2% |
| 5 years (annualized) | +11.8% | +11.6% |
| 10 years (annualized) | +11.6% | +12.0% |
Against its benchmark, VYM has tracked closely. It trailed the index by about 0.4 percentage points annually over ten years, which is modestly larger than its 0.04% fee alone would suggest, and it was slightly ahead over five years. Because the periods and dates are not perfectly aligned, these differences are approximate. Past performance is not a guarantee of future results, and these returns reflect market conditions that may not repeat.
VYM Top Holdings and Sector Breakdown
VYM follows a market-capitalization-weighted approach, so larger companies carry larger weights. The top 10 holdings represented about 25.9% of the portfolio as of June 30, 2026, which is moderate concentration for a fund of roughly 600 stocks. Broadcom alone accounts for 7.3%, notably more than any other position.
| Holding | Weight |
|---|---|
| Broadcom (AVGO) | 7.3% |
| JPMorgan Chase (JPM) | 3.4% |
| Johnson & Johnson (JNJ) | 2.5% |
| Exxon Mobil (XOM) | 2.4% |
| Caterpillar (CAT) | 2.0% |
| Cisco (CSCO) | 1.9% |
| AbbVie (ABBV) | 1.8% |
| Bank of America (BAC) | 1.6% |
| UnitedHealth Group (UNH) | 1.6% |
| Home Depot (HD) | 1.5% |
| Sector | Weight |
|---|---|
| Financial Services | 21.65% |
| Technology | 16.96% |
| Healthcare | 13.63% |
| Industrials | 11.59% |
| Energy | 9.99% |
| Consumer Defensive | 8.12% |
| Consumer Cyclical | 6.29% |
| Utilities | 5.07% |
| Communication Services | 3.38% |
| Basic Materials | 3.29% |
VYM ETF Pros and Cons
Pros
- Very low cost. At 0.04%, VYM is cheaper than many dividend ETFs, which leaves more of the income in investors’ hands.
- Broad diversification. Roughly 600 holdings across ten sectors reduces the impact of any single company’s dividend cut.
- Established track record. The fund has operated since 2006, giving investors nearly two decades of history through multiple market cycles.
- Deep liquidity. About $95.8 billion in assets and roughly 1.15 million shares traded daily generally support tight trading spreads.
- Regular income. Quarterly distributions may suit investors who want a predictable payout schedule.
Cons
- Moderate yield. At roughly 2.3% to 2.4%, VYM yields less than some more concentrated dividend funds.
- Financials tilt. Financial Services is the largest sector at 21.65%, so the fund’s results may be sensitive to banking-sector conditions.
- Single-stock weight. Broadcom’s 7.3% is a sizable position for a dividend-focused fund and means technology performance can influence results.
- No dividend-growth screen. The index selects on yield, not on a record of growing payouts, so it differs from dividend-growth strategies.
Who Should Invest in VYM?
Whether is VYM a good investment depends on your goals, time horizon and existing portfolio.
VYM may be a good fit if you:
- Want a low-cost, diversified core holding for U.S. dividend income
- Prefer index funds over picking individual dividend stocks
- Are building a long-term portfolio and plan to reinvest dividends
- Want quarterly income from large, established companies
- Are looking to add value-oriented exposure alongside growth-heavy holdings
VYM may not be ideal if you:
- Need the highest possible current yield, since VYM’s yield is moderate
- Prefer a dividend-growth strategy with a multi-year payout-increase screen
- Already hold substantial bank or financial exposure elsewhere and want to avoid overlap
- Want a concentrated portfolio of roughly 100 stocks rather than about 600
VYM Alternatives
| ETF | Expense Ratio | AUM | Key Difference |
|---|---|---|---|
| SCHD | 0.06% | ~$98.3B | ~100 stocks, quality and dividend-history screens |
| VIG | 0.04% | ~$110.8B | Dividend growth focus, lower yield |
| DGRO | 0.08% | ~$42.2B | Dividend growth with payout-ratio screen |
SCHD tracks the Dow Jones U.S. Dividend 100 Index, which requires a ten-year dividend history and screens on financial strength. It holds far fewer stocks than VYM and has historically paid a higher yield, but with more concentration.
VIG targets companies that have increased dividends for at least ten years and excludes the highest yielders. That produces a lower yield and a heavier technology weighting.
DGRO also emphasizes dividend growth, adding a payout-ratio screen, at a slightly higher fee and with a smaller asset base.
Related reading: SCHD ETF Review | VIG ETF Review | [DGRO ETF Review]
Frequently Asked Questions
Is VYM a good long-term investment?
VYM may suit long-term investors who value low costs and diversified dividend exposure. It has delivered double-digit annualized returns over the past five and ten years, though returns vary by period. Its suitability depends on your goals, risk tolerance and how it fits alongside your other holdings.
How often does VYM pay dividends?
VYM pays dividends quarterly. The amount can change from one payment to the next because it depends on the dividends paid by the underlying companies. Investors can choose to take the cash or reinvest through their brokerage.
What is the difference between VYM and SCHD?
VYM holds roughly 600 stocks and charges 0.04%, while SCHD holds about 100 and charges 0.06%. SCHD applies quality and dividend-history screens and is more concentrated, whereas VYM selects on yield across a broader set of companies. Their sector weights also differ, so the funds may behave differently in the same market.
Can I lose money investing in VYM?
Yes. VYM holds stocks, and share prices can fall, sometimes sharply. Dividends are not guaranteed and may be reduced or eliminated by individual companies. Investors should be prepared for the possibility of losing part or all of their principal.
Does VYM’s heavy financial sector weighting matter?
It may. Financial Services accounts for about 21.65% of the fund, so banking-sector conditions can have a meaningful effect on results. Investors who already own financial stocks or sector funds could end up with more concentrated exposure than they intend.
Data as of October 2026. Sources: issuer websites and finance.yahoo.com.
Disclaimer: The information in this article is for educational and informational purposes only. It does not constitute financial, investment, or tax advice. Past performance is not indicative of future results. Investing in ETFs involves risk, including possible loss of principal. Always consult a qualified financial advisor before making investment decisions.