Both of These Two Vanguard ETFs Both Offer Low Fees. But Which One Has Delivered the Better Five-Year Return?
Key Points
Vanguard High Dividend Yield ETF provides a higher trailing dividend yield and has delivered a stronger 1-year total return compared to Vanguard Dividend Appreciation ETF.
Vanguard Dividend Appreciation ETF focuses on companies with a track record of increasing payouts, leading to a larger concentration in the technology sector.
Both Vanguard funds share an identical, ultra-low expense ratio of 0.04%, making them highly cost-effective options for income investors.
Investors choosing between the Vanguard High Dividend Yield ETF (NYSEMKT:VYM) and the Vanguard Dividend Appreciation ETF (NYSEMKT:VIG) are essentially weighing a higher current income stream against the potential for companies to consistently raise their payouts.
Both funds provide income and stability, but they target different corporate behaviors: VYM seeks currently high yields, while VIG focuses on dividend growth over at least 10 consecutive years. This leads to distinct sector weights and risk profiles despite their shared low-cost pedigree within the Vanguard family.
Snapshot (cost & size)
| Metric | VYM | VIG |
|---|---|---|
| Issuer | Vanguard | Vanguard |
| Share price | $157.03 (as of 2026-10-05) | $236.15 (as of 2026-10-05) |
| Expense ratio | 0.04% | 0.04% |
| 1-yr return (as of Oct. 5, 2026) | 13.7% | 10.2% |
| Dividend yield | 2.3% | 1.5% |
| Beta | 0.73 | 0.81 |
| AUM | $100.8B | $132.4B |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Both Vanguard funds are highly efficient, sharing an identical 0.04% expense ratio. While costs are neutral, the Vanguard High Dividend Yield ETF offers a notably higher payout, at 2.3% versus 1.5% for the Vanguard Dividend Appreciation ETF.
Performance & risk comparison
| Metric | VYM | VIG |
|---|---|---|
| Max drawdown (5 yr) | (15.8%) | (20.4%) |
| Growth of $1,000 over 5 years (total return) | $1,724 | $1,659 |
What's inside
Vanguard Dividend Appreciation ETF targets companies that have raised dividends for at least 10 consecutive years. Its technology-heavy portfolio, which allocates 26% to the sector, includes its largest positions, such as Microsoft Corp (NASDAQ:MSFT) at 4.69%, Apple Inc (NASDAQ:AAPL) at 4.52%, and Broadcom Inc (NASDAQ:AVGO) at 4.36%. It holds 338 stocks. It was launched in 2006. Vanguard Dividend Appreciation ETF has paid $3.65 per share over the trailing 12 months, which, on its recent ~$236.15 share price, works out to a 1.5% yield.
Vanguard High Dividend Yield ETF tracks the FTSE High Dividend Yield Index and holds 589 stocks, prioritizing companies with higher-than-average current payouts. Its sector allocation is led by financial services at 22%, technology at 17%, and healthcare at 14%. Its largest positions include Broadcom Inc at 6.94%, JPMorgan Chase & Co (NYSE:JPM) at 3.83%, and ExxonMobil Holdings Corp (NYSE:XOM) at 2.70%. It was also launched in 2006. Vanguard High Dividend Yield ETF has paid $3.68 per share over the trailing 12 months, which, on its recent ~$157.03 share price, works out to a 2.3% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
When comparing the Vanguard High Dividend ETF (VYM) and the Vanguard Dividend Appreciation ETF (VIG), investors should consider several key factors. Let's see what they tell us about each fund.
First, we should discuss the differing strategies of each fund. VYM's primary goal is to deliver high income and yield to investors through owning dividend-paying stocks within the value category. Therefore, it holds dividend-paying stocks with relatively low price-to-earnings multiples, such as ExxonMobil and JPMorgan Chase. VIG, on the other hand, targets stocks with long-term potential. While tech stocks like Apple, Broadcom, and Microsoft don't pay the biggest dividends, they have excellent growth rates and high free cash flow that can support rising dividends or significant buyback programs.
Two other important factors are historical performance and income potential. While both funds have delivered similar returns, VYM has proved the winner over the last five years. VYM has generated a total return of 72%, equating to a compound annual growth rate of 11.5%. VIG, by contrast, has delivered a total return of 65%, with a 10.6% CAGR. Both funds have slightly underperformed the S&P 500, which generated a total return of 89% with a CAGR of 13.6% over the last five years. Turning to income, VYM has the edge. It offers a dividend yield of 2.3%, while VIG's is 1.5%.
One final factor to weigh is cost. But here, again, both funds have very similar profiles. In fact, both funds offer identical 0.04% expense ratios. This results in very low fees for both funds. For example, someone who invests $10,000 in either fund should expect to pay only $4 in fees per year.
In summary, although VYM and VIG are both dividend-focused ETFs, they are unique. VYM offers a higher yield and better historical returns over the last five years. Nevertheless, VIG may appeal to growth-oriented investors seeking to add a splash of income to their portfolio. Both funds' low expense ratios make them appealing to cost-conscious investors.
JPMorgan Chase is an advertising partner of Motley Fool Money. Jake Lerch has positions in ExxonMobil. The Motley Fool has positions in and recommends Apple, Broadcom, JPMorgan Chase, Microsoft, Vanguard Dividend Appreciation ETF, and Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.