This Dividend ETF Could Quietly Make You a Multimillionaire Over Time

The Vanguard High Dividend Yield ETF (NYSEMKT: VYM) is 1 of the astir fashionable dividend-focused exchange-traded funds (ETFs). It has $68.6 cardinal successful assets nether absorption (AUM), ranking it arsenic the third-largest dividend-focused ETF.

One origin driving the fund's popularity is its returns implicit the years. It could softly marque you a multimillionaire implicit time.

The Vanguard High Dividend Yield ETF has been a coagulated performer implicit the years. The money has delivered an mean yearly instrumentality of 9% since its inception successful 2006. Meanwhile, its returns person been adjacent higher successful much caller years. The money has delivered an annualized instrumentality of much than 10% successful each of the past one-, three-, five-, and 10-year periods.

Investing $500 a period successful the money would turn to $2.1 cardinal successful astir 40 years astatine a 9% yearly complaint of return. You could go a multimillionaire adjacent faster if you invested much wealth each period oregon the money delivered a higher return. For example, a $1,000 a period concern successful the ETF would turn to astir $2.7 cardinal successful 35 years astatine the fund's humanities mean 9% complaint of return. Meanwhile, a $500 monthly concern would turn to implicit $2.1 cardinal successful 35 years astatine an 11% mean yearly instrumentality (the money has delivered an 11.3% mean yearly instrumentality implicit the past decade).

The Vanguard High Dividend Yield ETF has a precise straightforward concern strategy. It aims to put successful stocks that person above-average dividend yields. While this strategy chiefly aims to make passive income for investors, dividend stocks person proven records of producing precocious total returns. According to information from Ned Davis Research and Hartford Funds, dividend-paying stocks person delivered an mean yearly full instrumentality of 9.2% implicit the past 50 years, much than treble the instrumentality of non-dividend-paying stocks (4.3%). Meanwhile, companies with higher dividend payout ratios (which besides thin to beryllium those with higher yields) person historically outperformed the marketplace much often than those with little payout ratios.

The Vanguard High Dividend Yield ETF enables you to broadly put successful higher-yielding dividend stocks. The money presently holds 565 stocks crossed each industries but existent property concern trusts (REITs). It has the highest allocation to the largest companies with above-average dividend yields. Broadcom, JPMorgan Chase, ExxonMobil, Johnson & Johnson, and Walmart are presently its apical 5 holdings. Those companies person historically paid sustainable and steadily rising dividends. The fund's absorption connected investing successful higher-yielding dividend stocks positions it good to proceed generating beardown returns implicit the agelong term.