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Vanguard High Dividend Yield ETF: Rotation From Growth Into Value Stocks Should Boost Investor Appetite For This ETF

Published Mon, 23 Nov 2020 08:56:53 -0500 on Seeking Alpha

Seeking AlphaETF AnalysisVanguard High Dividend Yield ETF: Rotation From Growth Into Value Stocks Should Boost Investor Appetite For This ETFNov. 23, 2020 8:56 AM ET|| About: Vanguard High Dividend Yield ETF (VYM), Includes: HDV, IWN, IWO, JNJ, JPM, JPM.PC, JPM.PD, JPM.PG, JPM.PH, MRNA, NFLX, PFE, PG, QQQ, SCHD, SPHD, SPYD, VNQ, VTRS, VZby: Bridger ResearchBridger Research Value, Growth, Contrarian, Long/Short EquitySummaryThe fund has managed to recover most of its losses after the COVID-19 pandemic related global market sell-off earlier this year.
High-Dividend stocks might become an interesting asset class, once investors shift away their focus from stay-at-home economy.
VYM has been successful so far to replicate the performance of the underlying benchmark FTSE High-Dividend Yield Index.
This time, we will initiate our coverage on the Vanguard High Dividend Yield ETF (VYM), which is one of the largest high-dividend related ETFs in the field. It has a total AUM of approximately $34 billion and comes with an annual expense ratio of as low as 0.06%. It offers investors a dividend yield (ttm) of 3.27% as of 11/20/2020, which is roughly 245 bps higher than the present 10 Year U.S. Treasury yield. We like this ETF given the fact it primarily consists of high-quality large caps that have been consistent with dividend payments over the last decade. Besides, now might be a good time to consider increasing an allocation of dividend-paying or value related holdings in your portfolio. Both Pfizer (PFE) and Moderna (MRNA) are on a good track to bring the COVID-19 vaccine candidate to the market over the coming months. In terms of the key bullish catalyst, we find the fact that this ETF trades at more than 50% lower P/E Ratio compared to the broader S&P 500 market. Therefore, we anticipate that this gap should narrow down in the near future.
About the fund
This ETF basically tries to replicate the success of its underlying benchmark FTSE High Dividend Yield Index,... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
VERIZON COMM 60.43   15.8 3.83 2.46 4.04
PFIZER 37.28   17.0 2.19 1.44 3.85
JOHNSON & JOHNSON 130.43   21.6 6.03 3.80 2.93
JPMORGAN CHASE 117.91   12.0 9.79 3.60 2.74
PROCTER & GAMBLE 122.77   90.3 1.36 2.98 2.49
POWERSHARES QQQ TRUST SERIES 1 193.23   0.0 0.00 1.49 0.78
NETFLIX 288.86   113.3 2.55 0.00 0.00


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