2 hours ago
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David Dierking, The Motley Fool
Sun, May 3, 2026 astatine 2:05 PM CDT 4 min read
The Vanguard High Dividend Yield ETF (NYSEMKT: VYM) has precise softly been a beardown performer successful 2026. Its double-digit weightings successful energy, tech, and industrials person helped boost show and made it an above-average performer successful the U.S. dividend exchange-traded money (ETF) category.
But April marked a crisp turnaround for tech and growth stocks. As has been the lawsuit successful the past, tech enactment tends to crook astir each different assemblage into a laggard. That's cooled the momentum for this money recently, but I inactive spot a bullish statement for the remainder of 2026.
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The lawsuit for owning VYM
The Vanguard High Dividend Yield ETF is trading up much than 8% twelvemonth to date, compared to conscionable implicit 4% for the S&P 500. It tilts toward higher income and worth worked successful the aboriginal portion of 2026, but not successful April. A 20% summation for the tech assemblage successful April suggests an overdone rally. That could plaything things backmost successful favour of VYM's much cyclical exposure.
One of the factors that drove investors to dividend stocks earlier successful 2026 was concerns astir valuations and overspending successful the tech sector's AI development. In April, immoderate of those fears calmed arsenic companies delivered coagulated gross and net maturation portion reiterating AI investment. That swung the pendulum backmost successful favour of tech, which delivered historically bully show past month.
But the longer-term lawsuit inactive favors the Vanguard High Dividend Yield ETF. Investors grew much antiaircraft this twelvemonth amid concerns astir precocious inflation, slowing growth, a stagnant labour market, and the warfare successful Iran. Those factors usually rapidly rise recession risk. These issues haven't gone distant yet, but they person been overshadowed implicit the past month.
The diversified quality of this fund's high-yield portfolio offers immoderate downside hazard should the system deteriorate. But the comparatively little vulnerability to traditionally antiaircraft areas of the market, specified arsenic user staples, offers investors the accidental to enactment successful risk-on marketplace gains. The ample allocation to financials hasn't helped performance, but the fund's little hazard illustration could bash good if economical measures deteriorate aboriginal this year.
VYM: Performance and cardinal metrics
| Year-to-date return | 8.3% |
| 1-year full return | 27.5% |
| 3-year annualized return | 16.3% |
| 5-year annualized return | 11.4% |
| Dividend yield | 2.4% |
| Expense ratio | 0.04% |
| Assets nether management | $72.6 billion |
| No. of holdings | 612 |
| Top sectors | Financials (20%), industrials (14%), healthcare (13%) |
Data source: Vanguard.
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