The main reason why many investors turn toward Vanguard ETFs is, most likely, cost. After all, Vanguard has made a name for itself by providing cheap index exposure. Often, Vanguard ETFs and mutual funds have the lowest expense ratios in their respective categories. And, with more people realizing the power of indexing and passive investing, those low costs will continue to be a big draw for investors.
But, those low-cost benefit investors in another way, namely a bigger dividend yield.
With less money going toward expenses, many Vanguard ETFs are an income seekers dream. You can actually find some of the company’s ETFs paying pretty impressive dividends. There’s simply more money going toward investors, rather than lining the fund manager’s pockets.
For those investors looking for much-needed high income, Vanguard ETFs have to be on your list. But, which ones to buy? Here are three top-notch choices that pay some pretty high yields.
Best High-Yield Vanguard ETFs to Buy Today #1: Vanguard Telecommunication Services ETF (VOX)
Dividend Yield: 3.48%
Telecommunications stocks have long been a fertile place for investors to find high yields, and Vanguard Telecommunication Services ETF (NYSEARCA:VOX) is no exception. Currently, the ETF yields a healthy 3.48%.
Driving that dividend is VOX’s index — the MSCI US Investable Market Telecommunication Services 25/50 Index. This index focuses strictly on the real telecommunications side of the telecom industry. We’re talking about the stocks that own cellular or wireless networks, broadband internet providers, and even fixed-line owners.
What that means is the 27 different stocks in VOX function like utilities and have stable fixed costs. Cash flows are, for the most part, distributed right back to investors. Top holdings include dividend stalwarts such as AT&T Inc. (NYSE:T) and CenturyLink Inc (NYSE:CTL).
Despite focusing on the boring side of the telecommunications industry, VOX has been pretty impressive on the returns front. Since the Vanguard ETFs inception back in 2004, VOX has returned 8.46% annually. That’s enough to turn $100,000 into more than $168,000. Helping power that return has been the ETFs big dividend.
And, thanks to VOX’s low expense ratio of 0.10% — or just $10 per $10,000 invested — investors can expect similar dividends/returns down the road.
Best High-Yield Vanguard ETFs to Buy Today #2: Vanguard Emerging Markets Government Bond ETF (VWOB)
Dividend Yield: 4.23%
Most investors have emerging market stocks down with the Vanguard Emerging Markets Stock Index Fd (NYSE:VWO). But, when it comes to emerging market bonds, portfolios are seriously lacking. Luckily Vanguard ETFs can come to the rescue- and provide a high yield as well.
The Vanguard Emerging Markets Government Bond ETF focuses its attention on dollar-denominated bonds issued by governments and government-related issuers in emerging market countries. “Dollar-denominated” bonds differ from local currency bonds as these debts are bought and sold in exchange for U.S. dollars. That provides some security to the underlying price of the bond.
There shouldn’t be any issues with local currency crashes or volatility. After all, the Greenback is still one of the most stable houses in the neighborhood. The majority of VWOB’s 956 bonds are rated between Aa and Baa. Top issuers are China, Brazil, and Mexico.
That produces a great yield of 4.23% and like all of Vanguard’s offerings, VWOB is a dirt cheap fund to own. Expenses or the emerging market bond ETF run at 0.32%. That makes it the low cost leader in the sector.
Best High-Yield Vanguard ETFs to Buy Today #3: Vanguard FTSE Europe ETF
Dividend Yield: 3.17%
Both the Dow Jones Industrial Average and the S&P 500 are sitting near all-time highs. That doesn’t make them screaming buys at the current moment. Nor does it make them a great place to find a high yield. Currently, the S&P 500 is only paying 1.86%.
But European equities are a different story. They currently trade at a discount to their American counterparts and offer a much larger dividend yield. The best way to snag that yield and play them is through the Vanguard FTSE Europe ETF (NYSE:VGK).
VGK tracks the FTSE Developed Europe Index. This is truly a one-stop-shop for European exposure. Investors get access to 16 different European nations- from the U.K. all the way down to Luxembourg. Moreover, the Vanguard ETF provides access to large- mid and small-cap stocks in developed Europe.
All in all, VGK holds a whopping 1271 different equities. That’s amazing coverage for the region and the ETF casts the widest net. Top holdings include energy giant Total SA (NYSE:TOT) and consumer products firm Unilever (NYSE: UL, NYSE:UN).
What’s really impressive is that wide net also creates a big dividend of 3.17%. Part of the reason for that large yield is VGK’s rock bottom expense ratio of 0.10%. The average fund in its category charges 1.48%.
As you can see with VGK, Vanguard ETFs can make all the difference when looking for a high yield.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.
