Today, we turn the spotlight onto five income ETFs offered by Vanguard Investments.
Investors looking for income from investments often find what they need in high-quality value stocks that pay above-average dividends. A smart way to do this is to buy low-cost, passively managed dividend funds … and Vanguard has several ETFs that fit the bill perfectly in this regard.
ETFs work well to meet the needs of income investors because the passive nature of index funds makes them cheap and tax-efficient, which are two attractive qualities for this kind of investing.
Since Vanguard ETFs are some of the cheapest in the investment universe, they’re also some the smartest plays for income investors.
5 Vanguard Income ETFs
Vanguard Dividend Appreciation (NYSEARCA:VIG): Vanguard’s VIG tracks the NASDAQ US Dividend Achievers Select Index, which consists of about 190 large-cap stocks, such as Microsoft Corporation (NASDAQ:MSFT) and PepsiCo, Inc. (NYSE:PEP), that have a history of increasing their dividends. The current yield is 2.06% and the expense ratio is a cheap 0.08%, or $8 for every $10,000 invested.
Vanguard High Dividend Yield (NYSEARCA:VYM): This dividend ETF from Vanguard focuses on stocks of companies that have high dividend yields. To do this VYM tracks the FTSE high dividend yield index, which includes over 420 dividend stocks like MSFT, Johnson & Johnson (NYSE:JNJ) and Exxon Mobil Corporation (NYSE:XOM). The current yield is 2.91% and the expense ratio is 0.08%.
Vanguard Mega Cap Value (NYSEARCA:MGV): Vanguard’s MGV is an ETF that holds value stocks with the largest market caps. To do this, MGV tracks CRSP Mega Cap Value Index, which covers about 150 mega-cap value stocks like MSFT, XOM, JNJ and Berkshire Hathaway Inc. (NYSE:BRK.A, NYSE:BRK.B). The current yield for MGV is 2.46% and the expense ratio is 0.07%.
Vanguard International Dividend Index (NYSEARCA:VIGI): Investors looking to diversify their dividend ETFs with international stocks may consider VIGI to fill that space. This income ETF tracks the Nasdaq International Dividend Achievers Select Index, which includes about 240 international dividend stocks like Tencent Holdings Ltd (OTCMKTS:TCTZF) and Nestle SA (ADR) (OTCMKTS:NSRGF). At 0.25%, the expense ratio isn’t cheap in a bubble, but is low for international funds. VIGI yields 1.69%.
Vanguard International High Dividend Yield Index (NYSEARCA:VYMI): This dividend ETF from Vanguard tracks the FTSE All-World ex US High Dividend Yield Index, which focuses on international stocks that pay above-average yields from dividends. The portfolio includes over 900 international stocks of companies from developed and emerging markets. The expense ratio for VYMI is 0.32%, and it yields 2.95%.
As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.