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Vanguard High Dividend Yield ETF: Well-Diversified And Cost-Efficient ETF

Published Tue, 24 Nov 2020 00:28:50 -0500 on Seeking Alpha

Seeking AlphaETF AnalysisVanguard High Dividend Yield ETF: Well-Diversified And Cost-Efficient ETFNov. 24, 2020 12:28 AM ET|| About: Vanguard High Dividend Yield ETF (VYM)by: Michael A. Gayed, CFAMichael A. Gayed, CFA The Lead-Lag ReportAnticipate Corrections and Volatility with Award Winning ResearchSummaryThe Vanguard High Dividend Yield ETF replicates the FTSE High Dividend Yield Index.
The fund is well-diversified, having a total of 417 holdings.
The majority of the stocks in its top 10 holdings have increased dividends over the past decade.
If I were going to put money into an index fund in relatively equal amounts over a 20 or 30-year period, I would pick a fund - and I know Vanguard has very low costs.- Warren Buffett
Those looking to invest in U.S. equities that pay a reasonably high dividend can take a look at the Vanguard High Dividend Yield ETF (VYM). The ETF is an excellent choice for long-term investors with a medium risk profile. With the U.S. Fed cutting interest rates to zero in 2020 amidst the economic fallout, investments in a dividend-paying ETF such as VYM look quite attractive. Dividend-paying stocks help with lowering the overall volatility of a portfolio in uncertain times. With a TTM dividend yield of around 3.23%, VYM provides decent returns for investors with a long-term investment horizon. Additionally, since the ETF replicates the FTSE high dividend yield index, it is relatively easier to manage, resulting in an attractive expense ratio 0.06%, significantly lower than that of its peers.

Constituent Holdings
VYM is a well-diversified fund. Given the current economic scenario, its high exposure to consumer defensive and healthcare stocks could act as a hedge against the prevailing volatility in the markets. The consumer defense sector has outperformed the market by a margin, and this trend is likely to continue given the current scenario.

(Source: Seeking Alpha)
The fund's most significant exposure is to the... Read more