Ways Vanguard ETFs Pay Dividends

Dec 19, 2023 By Triston Martin

Within the world of equities or fixed-income investments, Vanguard ETFs each focus on a distinct sub-category. The investments that Vanguard funds make in stocks or bonds often yield dividends or interest, which Vanguard then pays back to its owners in the form of distributions to fulfill the requirements for its tax status as an investment business.

Vanguard provides investors access to over 70 distinct exchange-traded funds (ETFs) that focus on stocks from a particular industry or sector, stocks with a particular market capitalization, stocks of companies based in other countries, and government and corporate bonds with varying maturities and degrees of risk. Morningstar, Inc. has awarded four stars out of a possible five to the vast majority of the exchange-traded funds (ETFs) offered by Vanguard Group.

Understanding Vanguard ETF Dividends

The cost ratios of Vanguard funds, in general, are renowned across the fund industry for being far lower than the norm, which is one of the most distinctive characteristics of Vanguard funds. As of September 2021, the net cost ratio of Vanguard ETFs fluctuates between 0.03 percent and 0.28 percent.

Vanguard ETF Dividend Yields

ETFs are often evaluated based on their dividend payments according to a 30-day SEC yield. This is a standardized yield produced by the Securities and Exchange Commission (SEC) to make fund comparisons as objectively as possible. The 30-day simple exponential moving average yield is a yield that is derived using the most recent 30-day period and indicates the investment income received by a fund after subtracting the fund's costs.

There are a few funds within Vanguard that distribute dividends every month. However, this is not very typical. As of September 2021, the 30-day SEC yield for Vanguard ETFs fluctuates from 0.18 percent to 3.88 percent. I hope you are now persuaded that investing in Vanguard dividend ETFs is a beneficial method to manage your money. Because, in my opinion, these dividend ETFs are some of the greatest ones to purchase and hold over time. On the other hand, be sure you don't waste your money by acting foolishly. Always be sure you complete your homework. After all, the money is on your own. Consequently, you should manage it carefully.

1: Best High Dividend Yield ETF – VYM

Let's look at the Vanguard High Dividend Yield Exchange Traded Fund. The stock ticker symbol for this Vanguard dividend fund when it trades on the New York Stock Exchange is VYM (NYSEARCA: VYM). As the name suggests, this exchange-traded fund (ETF) offers a hefty dividend.

ETFs follow an underlying stock market index. In addition, VYM follows the FTSE high dividend yield index very closely. This index is mostly made up of companies situated in the United States. Each company has dividend yields that are much greater than the market average.

2: Best Dividend Growth VIG

What about the next dividend fund from Vanguard? It's the Vanguard Dividend Appreciation ETF, in case you were wondering. The stock ticker symbol for this Vanguard dividend exchange-traded fund trades on the New York Stock Exchange (NYSE) is VIG (NYSEARCA: VIG). It is an excellent ETF to purchase and keep for the long term. VIG follows stocks included in the NASDAQ US Dividend Achievers Select Index. This index tracks a selection of publicly traded companies in the United States that are recognized for consistently increasing their dividend payments. To meet the requirements, the company must have increased its yearly dividend payments for at least ten years running in a row.

3: Best International Dividend ETF – VYMI

Following that, we will discuss overseas ETFs that pay dividends. And the Vanguard International High Dividend Yield ETF is my go-to choice for the best dividend ETF offered by Vanguard in this sector. In addition to that, I have invested in this Vanguard dividend fund. The NASDAQ stock market is where its shares are traded. The FTSE All-World ex-US High Dividend Yield Index is what the VYMI ETF follows following its stock policy. This index is composed of firms with dividend yields much greater than the market average. The FTSE Global Equity Index Series includes it as a component.

4. The Most Successful Utility ETF Is VPU

The next kind of dividend fund offered by Vanguard focuses on investing in utility firms. It is an exchange-traded fund known as Vanguard Utilities. You may not be interested in purchasing individual utility stocks, do you think? The VPU ETF is a fantastic solution in such a case.

5: Best REIT ETF - VNQ

It would seem that everyone is interested in making investments in real estate. But who wants the headaches that come with being a landlord or an owner of the property? Therefore, real estate investment trusts, sometimes known as REITs, are a viable choice. They simplify the process of investing in real estate. Companies like this are the ones who buy up office buildings, hotels, and many other types of real property.

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