2024-03-06 22:00:17 ET
Summary
- VYM is a $63 billion dividend ETF with a 0.06% expense ratio and 3% expected dividend yield. Its 300+ holdings make it one of the best-diversified dividend funds available.
- VYM's 3% likely doesn't fit the definition of "high yield" for many income investors. However, historical data indicates aggressively seeking a high yield is not a winning strategy.
- Three months ago, I cautioned VYM shareholders that growth rates for most U.S. stocks were declining rapidly. However, I'm pleasantly surprised to see VYM's growth rates hold up well.
- In contrast, growth rates for ETFs like SCHD, FDL, and DVY, have faltered, and since VYM still trades at an attractive 17x forward earnings, its better balance warrants a rating upgrade.
- As a reminder, SCHD's Index reconstitutes in less than two weeks. If you're on the fence between VYM and SCHD, please consider my planned update on or around March 18, 2024.
Investment Thesis
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VYM: This 3% Dividend Yielding ETF Looks Better Than SCHD (Rating Upgrade)