The Vanguard High Dividend Yield ETF (VYM) is a popular choice for passive investors seeking steady and reliable income with a low expense ratio of 0.06%. VYM provides exposure to hundreds of dividend payers across a wide range of industries. The ETF follows the FTSE High Dividend Yield Index.
Unlike other higher-yielding dividend ETFs that may be overweight in financials, VYM offers deep sector diversification. It has a modest 22.6% exposure to financials and double-digit percentage exposure to several other sectors. With a yield of 2.74%, retirees may not be getting the highest passive income.
However, the caliber of names within VYM, including standout growth plays like semiconductor firms, make it a solid choice. The Vanguard Dividend Appreciation ETF (VIG) is another strong contender for retiree portfolios. Like VYM, it has a low cost with a 0.06% expense ratio.
Guiding retirees to dividend income
However, it focuses more on dividend growth rather than upfront yield. VIG passively follows the S&P U.S. Dividend Growers Index, which offers a yield of 1.73% but is more growth-focused.
If a yield under 2% meets your needs, VIG may be worthy of a spot in your portfolio. This is particularly true for younger retirees who need their retirement fund to grow over the years. Despite trailing the S&P 500, VIG’s focus on long-term dividend growth makes it attractive for value-oriented investors.
It also has less concentration in the tech sector compared to the broader market. Retirement can be daunting, but it doesn’t need to be. Investing in reliable Vanguard ETFs like VYM and VIG can provide retirees with steady, low-cost income streams.
By incorporating these solid funds into their portfolios, retirees can look forward to a financially secure future.