VYM vs. FDVV: Which U.S. Dividend ETF Is a Better Choice?

22 hours ago 3

Ben Gran, The Motley Fool

Wed, June 3, 2026 astatine 8:20 AM CDT 5 min read

If you privation to put successful high-yield dividend stocks, buying a dividend exchange-traded money (ETF) tin beryllium an easy, low-cost mode to bash that. But not each dividend ETFs connection the aforesaid precocious yields oregon the aforesaid banal mix. If you're not careful, you mightiness extremity up investing successful a money that's not the close acceptable for your goals.

Why bash radical bargain dividend stocks? I personally don't ain immoderate dividend funds. But if I were going to bargain dividend ETFs, I would privation wide diversification to support against a imaginable tech downturn. I would privation to ain shares of companies that are not intimately linked to the artificial quality (AI) boom.

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Many of the champion dividend stocks are successful alleged "boring" industries. They usually don't turn arsenic accelerated arsenic large tech names, but they are steady. Their equilibrium sheets are strong. They support cranking retired coagulated profits and paying bully dividends.

Two fashionable U.S. dividend banal ETFs, the Vanguard High Dividend ETF (NYSEMKT: VYM) and the Fidelity High Dividend ETF (NYSEMKT: FDVV), connection antithetic approaches. Both person underperformed the S&P 500 scale successful the past twelvemonth and implicit the past 5 years.

That's a large crushed wherefore I don't bargain dividend banal ETFs -- they often neglect to bushed the market. But depending connected your goals, dividend funds mightiness connection dependable income and little volatility than different banal ETFs.

Let's spot which of these 2 U.S. dividend funds could beryllium the amended choice.

A blessed middle-aged mates spot bully returns from their dividend ETFs.

Vanguard High Dividend ETF (VYM): 608 stocks, 5 years of 11.5% annualized returns

The Vanguard High Dividend ETF is simply a passively managed, low-cost scale money that invests successful ample U.S. value-oriented stocks that are expected to present higher-than-average dividend yields. The fund's holdings (as of April 30) see 608 stocks.

This ETF has delivered annualized returns (by nett plus value) of 11.5% for the past 5 years and 26.5% past year. Its trailing 12-month dividend output is 2.24%, and the fund's disbursal ratio is an ultra-low 0.04%.

One spot of this Vanguard ETF is its diversification crossed a wide scope of sectors. Its apical holdings by assemblage are fiscal stocks (20.2% of the fund's assets), exertion (14.8%), industrials (14.2%), healthcare (11.8%), and vigor (9.7%).

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