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Vanguard High Dividend Yield ETF Should Benefit From The Current Low Rate Environment

Published Mon, 13 Jul 2020 20:18:29 -0400 on Seeking Alpha

Seeking AlphaETF AnalysisVanguard High Dividend Yield ETF Should Benefit From The Current Low Rate EnvironmentJul. 13, 2020 8:18 PM ET|| About: Vanguard High Dividend Yield ETF (VYM)by: Ploutos InvestingPloutos Investing Dividend growth investing, growth at reasonable price, value, long-term horizonSummaryVYM focuses on large-cap and giant-cap quality dividend growth stocks in the U.S.
Most of its top-10 holding have consistently increased their dividends in the past 10 years.
VYM pays an attractive 3.7%-yielding dividend and is trading at a discount to the S&P 500 Index.
ETF Overview
It was 6 months ago since I have written an article on Vanguard High Dividend Yield ETF (VYM). Given that the macroeconomic environment has changed dramatically, I believe it is time for me to provide an analysis of the fund again. VYM consists of a portfolio of large-cap and giant-cap dividend stocks. These are stocks that have consistently increased their dividends in the past and have stronger balance sheets than their smaller peers. The fund is also trading at an attractive valuation than the S&P 500 Index and pays a growing 3.7%-yielding dividend. Therefore, we continue to think this is a good fund to own for investors seeking dividend growth and capital appreciation.

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Fund Analysis
A portfolio of mostly large-cap and giant-cap stocks
VYM's selection criteria have resulted in a portfolio of mostly large-cap and giant-cap stocks. For those who want to know how VYM constructs its portfolio, please read my previous article here. As can be seen from the table below, giant-cap and large-cap stocks represent about 48.7% and 36.1% of its total portfolio, respectively. We like VYM's portfolio as these large-cap and giant-cap stocks generally do have stronger balance sheets than their smaller peers. This is important in a COVID-19 world as we do not know how long this pandemic will last. In the U.S., the epicenter has shifted from New York to... Read more