![]() VYM is a massive fund with $49.66 billion in assets under management, and for all intents and purposes, it does its job. VYM attempts to replicate the target index by investing all, or substantially all, its assets in the stocks that make up the Index. VYM employs an indexing investment approach designed to track the performance of the FTSE High Dividend Yield Index, which consists of common stocks of companies that pay dividends that generally are higher than average. VYM provides investors with a convenient way to gain exposure to equities with above-average dividend yields through a passively managed fund. The numbers are not in VYM's favor, and the dividend characteristics are not even in the same ballpark. I looked at VYM as an investment in its totality, then a side-by-side comparison since SCHD went public. I am following up with this article because I looked at VYM and SCHD a bit differently and felt the reader base would be interested in the analysis. I have previously covered VYM ( can be read here), so if you had read that article, the next 2 paragraphs aren't new information as the investment methodology for VYM hasn't changed. We're not living in a yield-starved environment, and there are many investment products out there that offer yields that exceed 5%, so should VYM even be considered a "High Dividend Yield" investment? The premise around VYM and a look at its dividend If I were going to allocate capital toward income-producing assets today, I would need a compelling reason to settle for the 3.09% that VYM offers rather than investing in a CD at 5.05% for 10 months, or buying a 2-year T-bill at 4.01%. The problem that I have when thinking about deploying additional capital to dividend ETFs is that VYM doesn't offer a double-digit yield like the JPMorgan Equity Premium ETF ( JEPI ), and it doesn't have the capital appreciation or dividend growth characteristics of the Schwab U.S Dividend Equity ETF ( SCHD ). ![]() I also have no intentions of exiting my position in VYM as I am a fan of diversification. I have nothing bad to say about my investment in VYM, as it performed well and generated consistent income, which has benefited from reinvesting each dividend along the way, but I have no desire to add more to the portfolio. ![]() I can make an investment and spend minimal time monitoring it and allocate additional capital when opportunities present themselves. I can't speak on anyone else behalf, but for me, I like having an investment product that is focused on quality dividends and generating a respectable yield rather than piecing it together from individual equities. Why do investors like allocating capital toward dividend-focused ETFs such as the Vanguard High Dividend Yield ETF ( NYSEARCA: VYM). ![]()
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