Many Vanguard exchange-traded funds (ETFs) pay dividends on a regular basis, typically monthly or quarterly. Vanguard ETFs specialize in one specific area within stocks or the fixed-income realm.
The investments in stocks or bonds that the funds make typically pay dividends or interest, which Vanguard distributes back to its shareholders in the form of dividends to meet its investment company tax status.
Vanguard offers many different ETFs that specialize in specific sector stocks, stocks of a certain market capitalization, foreign stocks, and government and corporate bonds of different durations and levels of risk. The majority of Vanguard ETFs are rated three or four stars by Morningstar, Inc., with some funds having two or five stars.
Key Takeaways
- Vanguard is a large investment advisor offering mutual funds and ETFs, many of which pay dividends.
- Most of Vanguard's ETF products pay monthly or quarterly dividends.
- Expense ratios are the fees investors pay for investing in a fund; the lower the better.
- Vanguard ETFs are noted in the industry for their lower-than-average expense ratios.
Understanding Vanguard ETF Dividends
Vanguard ETF Expense Ratios
One of the more unique features of Vanguard funds, in general, is they are known in the fund industry for expense ratios that are lower than average. As of Jan. 2024, Vanguard ETFs' expense ratios range between 0.03% and 0.22%, while the average expense ratio as of Dec. 2021 (latest information) is about 0.06% for a typical Vanguard ETF, compared to an industry average of 0.24%.
The most expensive Vanguard ETFs tend to be those that invest overseas or have high turnover ratios and specialize in very narrow market niches. The least expensive Vanguard ETFs tend to be those that specialize in corporate or Treasury bonds.
Note
Many investment advisors offer funds with 0% expense ratios.
Vanguard ETF Dividend Yields
ETFs are typically judged on their dividend distributions based on a 30-day SEC yield, which is a standardized yield developed by the Securities and Exchange Commission (SEC) for the fair comparison of funds. The 30-day SEC yield is calculated based on the last 30-day period and reflects investment income earned by a fund after deducting its expenses.
Vanguard ETFs pay dividends either monthly or quarterly. The 30-day SEC yields for Vanguard ETFs range between 0.45% and 6.71% as of Dec. 31, 2023.
What Is an Expense Ratio?
An expense ratio is a percentage that an investment advisor charges investors for administrative and operating expenses. Expense ratios reduce investors' returns, so it's always a good idea to look for funds with low expense ratios. Generally, passively managed funds will have lower expense ratios than actively managed funds.
Is a Mutual Fund Better or an Exchange-Traded Fund (ETF)?
Whether a mutual fund or an exchange-traded fund (ETF) is better will depend on the investor and their goals. ETFs have significantly gained in popularity due to the ease of buying and selling them like stocks through online brokerage accounts. Many of them also come with low expense ratios.
How Do Fund Dividends Work?
Investors in mutual funds or ETFs do not actually own the shares of the companies that the funds invest in; they only own a portion of the fund. However, any shares that pay dividends, those dividends are then passed onto the investor of the mutual fund or ETF directly into their account.
Which ETF Pays the Highest Dividend?
According to VettaFi, the Simplify Tail Risk Strategy ETF pays the highest dividend. It has a dividend yield of 234.58%. The next highest is YieldMax TSLA Option Income Strategy ETF, which pays out a dividend yield of 94.44%; much smaller in comparison to the Simplify ETF. Other managers who offer high-yielding dividend funds include GraniteShares, CICC, and Tidal Investments.
The Bottom Line
Vanguard is a large investment advisor offering a variety of investment funds. Many of these have low expense ratios, providing affordable investment options for investors. Of the stocks in the funds that pay dividends, Vanguard pays out those dividends to holders of the funds. Investors can use dividend-yielding funds to complement their portfolios in order to generate an income stream, which is particularly beneficial for risk-averse investors or those nearing or in retirement.
FAQs
ETFs: ETF Database Realtime Ratings
| Symbol Symbol | ETF Name ETF Name | Annual Dividend Rate Annual Dividend Rate |
|---|
| VIG | Vanguard Dividend Appreciation ETF | $3.23 |
| VYM | Vanguard High Dividend Yield Index ETF | $3.42 |
| VYMI | Vanguard International High Dividend Yield ETF | $3.35 |
| VIGI | Vanguard International Dividend Appreciation ETF | $1.64 |
2 more rowsCons. No guarantee of future dividends. Stock price declines may offset yield. Dividends are taxed in the year they are distributed to shareholders.
What is the best dividend paying ETF? ›
7 high-dividend ETFs
| Ticker | Company | Dividend Yield |
|---|
| DIV | Global X SuperDividend U.S. ETF | 6.82% |
| SPYD | SPDR Portfolio S&P 500 High Dividend ETF | 4.44% |
| SPHD | Invesco S&P 500 High Dividend Low Volatility ETF | 4.15% |
| LVHD | Franklin U.S. Low Volatility High Dividend Index ETF | 4.12% |
3 more rows4 days ago
They may pay the money directly to the shareholders, or reinvest it in the fund. Not all ETFs earn dividends for their shareholders, and some ETFs are invested primarily in stocks that historically pay high dividends to their shareholders.
What Vanguard fund pays the most dividends? ›
VHYAX-Vanguard High Dividend Yield Index Fund Admiral Shares | Vanguard.
How do Vanguard ETF dividends work? ›
An ETF is essentially a diversified set of securities and as such, acts as a microcosm of a whole portfolio of investments. In the same way you may receive income (known as dividends) from individual investments within a portfolio, an ETF receives income from the companies or securities it holds.
Can you live off ETF dividends? ›
So what does it mean to live off your dividends? If you invest in dividend-paying stocks, mutual funds, or ETFs, which provide distributions of stocks or cash to shareholders, over time, the cash generated by those dividend payments can supplement your income when you retire.
Is it better to buy dividend stocks or dividend ETFs? ›
Dividend ETFs or Dividend Stocks: Which Is Better? Dividend ETFs can be a good option for investors looking for a low-cost, diversified and reliable source of income from their investments. Dividend stocks may be a better option for investors who prefer to choose their own investments.
Why is ETF not a good investment? ›
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.
Are monthly dividend ETFs worth it? ›
Benefits Of Monthly Dividend ETFs
Monthly dividends have their advantages. For one, they're better than quarterly dividends for covering living expenses. You only have to budget the income 30 days at a time, rather than 90. Monthly payouts are also convenient for reinvesting.
Top 100 Highest Dividend Yield ETFs
| Symbol | Name | Dividend Yield |
|---|
| QRMI | Global X NASDAQ 100 Risk Managed Income ETF | 12.32% |
| YMAX | YieldMax Universe Fund of Option Income ETFs | 12.30% |
| XRMI | Global X S&P 500 Risk Managed Income ETF | 12.28% |
| RYLD | Global X Russell 2000 Covered Call ETF | 12.26% |
93 more rowsVOO Dividend Information
VOO has a dividend yield of 1.33% and paid $6.41 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Mar 22, 2024.
Do Vanguard ETFs automatically reinvest dividends? ›
Transfer to a Vanguard® fund.
Use our Directed Dividend Plan to have your dividends and/or capital gains distributions reinvested automatically in shares of another identically registered Vanguard holding.
How many dividend ETFs should I own? ›
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.
Do you pay taxes on ETF dividends? ›
Dividends and interest payments from ETFs are taxed similarly to income from the underlying stocks or bonds inside them. For U.S. taxpayers, this income needs to be reported on form 1099-DIV. 2 If you earn a profit by selling an ETF, they are taxed like the underlying stocks or bonds as well.
Does Vanguard S&P 500 ETF pay dividends? ›
Dividend Summary
There are typically 4 dividends per year (excluding specials), and the dividend cover is approximately 1.0.
What is Vanguard High dividend ETF? ›
Seeks to track the performance of the FTSE® High Dividend Yield Index, which measures the investment return of common stocks of companies characterized by high dividend yields. Provides a convenient way to track the performance of stocks that are forecasted to have above-average dividend yields.
What is the dividend yield for Vanguard Financial ETF? ›
VFH has a dividend yield of 1.90% and paid $1.88 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Mar 22, 2024.
How much does Voo pay in dividends? ›
VOO dividend yield as of May 2024
Over the last five years, VOO's dividend yield has varied between a minimum of 1.22% and a maximum of 2.59%, with an average of 1.61%.
