Vanguard High Dividend Yield Index Fund

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Vanguard High Dividend Yield Index Fund

Post by abuss368 » Fri Dec 20, 2019 9:45 pm

Bogleheads -

This is a new fund from Vanguard with an inception date of 2/7/2019 for Admiral shares. The fund presently has a 3.21% yield and is U.S. only.

Does anyone invest in this fund? If so what allocation are you using? What are thoughts and perspectives?
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Re: Vanguard High Dividend Yield Index Fund

Post by arcticpineapplecorp. » Fri Dec 20, 2019 10:10 pm

maybe not suitable for taxable accounts, where you'd want to reduce, not increase dividend payouts.
In addition to general stock market risks, the fund’s emphasis on slower-growing, higher-yielding companies can also mean that its total return may not be as strong in a significant bull market.

source: https://investor.vanguard.com/mutual-fu ... file/VHYAX

it's classified as "Large Value". How might this differ from Vanguard's Large Cap Value Index fund? (other than this fund is .08% expense ratio instead of .05%):
https://investor.vanguard.com/mutual-fu ... file/vviax

seems like the difference is high yield has a tilt to tech, consumer goods, oil and gas, utilities and basic materials, but the large cap value has a tilt to financials, consumer services, health care, telecomunications and industrials.
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Re: Vanguard High Dividend Yield Index Fund

Post by siamond » Fri Dec 20, 2019 10:36 pm

abuss368 wrote:
Fri Dec 20, 2019 9:45 pm
This is a new fund from Vanguard with an inception date of 2/7/2019 for Admiral shares. The fund presently has a 3.21% yield and is U.S. only.
We assembled a "High Dividend Yield" data series in the Simba backtesting spreadsheet a little while ago. Vanguard launched the investor version of the fund in 2006, Vanguard High Dividend Yield Index Fund. We can go further back in history by using corresponding indices, e.g. FTSE High Dividend Yield TR USD, MSCI USA High Dividend Yield GR USD.

I just took a quick look, and the trajectory over the past 3 decades is nearly identical to VTSAX. A retiree who really likes dividends might be interested, but as we know, this is a flawed reasoning, one should only pay attention to total returns.

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Re: Vanguard High Dividend Yield Index Fund

Post by scripter2002 » Fri Dec 20, 2019 10:45 pm

Curious why a fund such as Vdigx is a bad choice for IRA.

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Re: Vanguard High Dividend Yield Index Fund

Post by grog » Fri Dec 20, 2019 10:57 pm

scripter2002 wrote:
Fri Dec 20, 2019 10:45 pm
Curious why a fund such as Vdigx is a bad choice for IRA.
That fund should be fine in an IRA. But probably not ideal for a taxable account since it has some turnover.

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Re: Vanguard High Dividend Yield Index Fund

Post by MathIsMyWayr » Fri Dec 20, 2019 11:41 pm

grog wrote:
Fri Dec 20, 2019 10:57 pm
scripter2002 wrote:
Fri Dec 20, 2019 10:45 pm
Curious why a fund such as Vdigx is a bad choice for IRA.
That fund should be fine in an IRA. But probably not ideal for a taxable account since it has some turnover.
Someone may favor high dividend funds for whatever reason, e.g., effortless income without having to go through the agony of selling shares.

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Re: Vanguard High Dividend Yield Index Fund

Post by TropikThunder » Sat Dec 21, 2019 1:05 am

abuss368 wrote:
Fri Dec 20, 2019 9:45 pm
Bogleheads -

This is a new fund from Vanguard with an inception date of 2/7/2019 for Admiral shares. The fund presently has a 3.21% yield and is U.S. only.

Does anyone invest in this fund? If so what allocation are you using? What are thoughts and perspectives?
New?? It opened in Nov 2006 as the Investor class VHDYX and ETF VYM. It's not new.

And I'll go back and look again but I'm pretty sure there has been a thread or two on the relative wisdom of selecting funds based on dividend yield. To that end, it's lagged VTSAX in its short life by all measures per Portfolio Visualizer except StdDev (VTSAX has higher CAGR, better Best Year, lower Max Drawdown, and higher Sharpe and Sortino ratios).

Also, I don't think it fits into the Two Fund Portfolio. :P

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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Sat Dec 21, 2019 8:13 am

TropikThunder wrote:
Sat Dec 21, 2019 1:05 am
abuss368 wrote:
Fri Dec 20, 2019 9:45 pm
Bogleheads -

This is a new fund from Vanguard with an inception date of 2/7/2019 for Admiral shares. The fund presently has a 3.21% yield and is U.S. only.

Does anyone invest in this fund? If so what allocation are you using? What are thoughts and perspectives?
New?? It opened in Nov 2006 as the Investor class VHDYX and ETF VYM. It's not new.

And I'll go back and look again but I'm pretty sure there has been a thread or two on the relative wisdom of selecting funds based on dividend yield. To that end, it's lagged VTSAX in its short life by all measures per Portfolio Visualizer except StdDev (VTSAX has higher CAGR, better Best Year, lower Max Drawdown, and higher Sharpe and Sortino ratios).

Also, I don't think it fits into the Two Fund Portfolio. :P
Thanks. I enjoy learning about new funds so thus I asked the question. Personally not considering the fund.
Last edited by abuss368 on Sat Dec 21, 2019 9:31 am, edited 1 time in total.
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Re: Vanguard High Dividend Yield Index Fund

Post by Elysium » Sat Dec 21, 2019 8:52 am

abuss368 wrote:
Sat Dec 21, 2019 8:13 am
TropikThunder wrote:
Sat Dec 21, 2019 1:05 am
abuss368 wrote:
Fri Dec 20, 2019 9:45 pm
Bogleheads -

This is a new fund from Vanguard with an inception date of 2/7/2019 for Admiral shares. The fund presently has a 3.21% yield and is U.S. only.

Does anyone invest in this fund? If so what allocation are you using? What are thoughts and perspectives?
New?? It opened in Nov 2006 as the Investor class VHDYX and ETF VYM. It's not new.

And I'll go back and look again but I'm pretty sure there has been a thread or two on the relative wisdom of selecting funds based on dividend yield. To that end, it's lagged VTSAX in its short life by all measures per Portfolio Visualizer except StdDev (VTSAX has higher CAGR, better Best Year, lower Max Drawdown, and higher Sharpe and Sortino ratios).

Also, I don't think it fits into the Two Fund Portfolio. :P
Thanks. I enjoy learning about new funds so this I asked the question. Personally not considering the fund.
High Dividend is different from Dividend Growth. Focusing only on High Dividend Yield which VYM follows results often in having lower quality companies that are issuing higher yields. This is somewhat similar to High Yield bond investing vs higher quality bonds, not the same, but I am just drawing a broad analogy. Dividend Growth strategy followed by VIG/VDADX instead focuses on companies that are also higher quality by including companies with a history of increasing dividend payout over the years. This is often a sign of financial stability. These companies do not necessarily offer highest dividend yields, but end up being better companies financially.

The difference is there to see in performance, VIG/VDADX had both better performance and lower S/D compared to VYM and VTI. Obviously there are no guarantees this will continue, but if I were to bet on a dividend focused strategy then I would go for VIG instead of VYM.

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Re: Vanguard High Dividend Yield Index Fund

Post by Vanguard Fan 1367 » Sat Dec 21, 2019 9:53 am

If I recall correctly the great John Bogle mumbled something about dividend funds that might be something to consider when investing. I bought the VYM in 2014 and have done fabulously well with it. Now that I spend some time on Bogleheads and have studied the issues I prefer Vanguard's Total Stock Market. But I don't reinvest the dividends with my VYM and let it increase my taxable income each year more than the equivalent amount of Total Stock Market.

It sure beats what some of my friends and acquaintances are doing, with going with 1% assets under management fees, 1% expense ratios, and 5.5% loads.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."

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Re: Vanguard High Dividend Yield Index Fund

Post by Scooter57 » Sat Dec 21, 2019 9:59 am

If you are interested in high dividend stocks, the last thing you want is a fund that chooses what it invests in based only on the size of the dividend.

Some stocks pay high dividends because the company is wealthy and mature and attracts stockholders by offering steady dividends. Others offer high dividends because the company is skating on thin ice and desperately hoping the outside dividend will attract naive investors.

If you are going to buy high dividend stocks, buy ones that are chosen by applying quality metrics along with those that look at the size of the dividend.

Right now, because of the large number of retirees who have turned to dividend-oriented investing during this period of ridiculously low interest rates, the prices of every high quality dividend-paying stock you might have wanted to own were you inclined to buying dividend-paying stocks have been pushed up so high that the dividends are no longer attractive. (Remember, the amount of the dividend paid stays pretty constant from quarter to quarter, so if the price of a share goes up, the dividend yield for that share goes down.)

The stocks with high dividends nowadays tend to be those whose dividends include a lot of return of capital (REITS, BDCs), very risky companies, and companies that have borrowed unwisely to provide the money needed for the high dividends that keep investors buying the stock of companies that otherwise have little to offer for the future.

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Re: Vanguard High Dividend Yield Index Fund

Post by grog » Mon Jan 13, 2020 12:37 pm

Scooter57 wrote:
Sat Dec 21, 2019 9:59 am
If you are interested in high dividend stocks, the last thing you want is a fund that chooses what it invests in based only on the size of the dividend.

Some stocks pay high dividends because the company is wealthy and mature and attracts stockholders by offering steady dividends. Others offer high dividends because the company is skating on thin ice and desperately hoping the outside dividend will attract naive investors.

If you are going to buy high dividend stocks, buy ones that are chosen by applying quality metrics along with those that look at the size of the dividend.

Right now, because of the large number of retirees who have turned to dividend-oriented investing during this period of ridiculously low interest rates, the prices of every high quality dividend-paying stock you might have wanted to own were you inclined to buying dividend-paying stocks have been pushed up so high that the dividends are no longer attractive. (Remember, the amount of the dividend paid stays pretty constant from quarter to quarter, so if the price of a share goes up, the dividend yield for that share goes down.)

The stocks with high dividends nowadays tend to be those whose dividends include a lot of return of capital (REITS, BDCs), very risky companies, and companies that have borrowed unwisely to provide the money needed for the high dividends that keep investors buying the stock of companies that otherwise have little to offer for the future.
I agree with the above that it is not wise to weight by dividend payout, but, now that I've researched the fund a little bit, I've now realized that isn't an accurate description of what this fund does. I got curious since, despite to the name, this fund does not have an extraordinarily high dividend yield. Turns out it tracks the FTSE High Dividend Yield Index which is a market cap weighted index of companies with above average dividends. So it's essentially TSM with below average dividend companies excluded (notably skipping all the tech giants). I think this is the smart way to do it for a fund like this since it's not deviating as strongly from the market as one might suppose. Vanguard was wise to avoid a strategy that chases higher yield and simultaneously selects for a lot of unattractive characteristics.

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Re: Vanguard High Dividend Yield Index Fund

Post by Schlabba » Mon Jan 13, 2020 12:58 pm

MathIsMyWayr wrote:
Fri Dec 20, 2019 11:41 pm
grog wrote:
Fri Dec 20, 2019 10:57 pm
scripter2002 wrote:
Fri Dec 20, 2019 10:45 pm
Curious why a fund such as Vdigx is a bad choice for IRA.
That fund should be fine in an IRA. But probably not ideal for a taxable account since it has some turnover.
Someone may favor high dividend funds for whatever reason, e.g., effortless income without having to go through the agony of selling shares.
I can relate to that argument. I am not in the drawdown phase of my life yet but I do notice I get quite attached to my investments.
Secretly a dividend investor. Feel free to ask why.

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Re: Vanguard High Dividend Yield Index Fund

Post by grog » Mon Jan 13, 2020 1:24 pm

Schlabba wrote:
Mon Jan 13, 2020 12:58 pm
MathIsMyWayr wrote:
Fri Dec 20, 2019 11:41 pm
grog wrote:
Fri Dec 20, 2019 10:57 pm
scripter2002 wrote:
Fri Dec 20, 2019 10:45 pm
Curious why a fund such as Vdigx is a bad choice for IRA.
That fund should be fine in an IRA. But probably not ideal for a taxable account since it has some turnover.
Someone may favor high dividend funds for whatever reason, e.g., effortless income without having to go through the agony of selling shares.
I can relate to that argument. I am not in the drawdown phase of my life yet but I do notice I get quite attached to my investments.
Just to clarify my comment, VDIGX (not the same fund as VYM) is an actively-manage fund with a dividend growth strategy. It actually has a similar dividend yield as the overall market. My thought was just that it's not ideal to have an active fund in taxable because of capital gains. There is an dividend appreciation ETF called VIG that would seem like a better alternative than VDIGX for taxable.

If you are living on the dividends VYM is probably not too bad for taxable.

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Re: Vanguard High Dividend Yield Index Fund

Post by GatorBait2018 » Mon Jan 13, 2020 1:28 pm

Might it make sense to build a full index by storing your high dividend fund in tax advantaged accounts and then a high growth fund in taxable?

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Re: Vanguard High Dividend Yield Index Fund

Post by dru808 » Mon Jan 13, 2020 1:56 pm

I do, the etf, not necessarily for high dividends it’s more valuey than vtv. I have no complaints
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Re: Vanguard High Dividend Yield Index Fund

Post by fortyofforty » Tue Jan 14, 2020 7:38 am

P/E ratio of 17.9% for High Dividend Yield Index versus 21.9% for Total Stock Market. It's a value play, that has underperformed in the short term. I suppose if you believe value will outperform growth, it might make sense. You are dropping the first six out of the top ten holdings of VTI, as of November 30. If technology companies scare you, you might go this route.

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Re: Vanguard High Dividend Yield Index Fund

Post by stan1 » Tue Jan 14, 2020 8:06 am

My suspicion is that high dividend yield equity funds have been "marketed" over the past decade to retirees who are disappointed about low interest rates in fixed income investments. I'm sure the advisors that do this explain the risks, but the client accepts it (perhaps without full understanding) in order to get higher yield. The distinction between dividends, appreciation (unrealized gains), and realized gains is lost. A small percentage of the population thinks like Bogleheads. There are many worse things that could happen.

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Re: Vanguard High Dividend Yield Index Fund

Post by Schlabba » Sat Feb 01, 2020 12:33 pm

abuss368 wrote:
Fri Dec 20, 2019 9:45 pm
Bogleheads -

This is a new fund from Vanguard with an inception date of 2/7/2019 for Admiral shares. The fund presently has a 3.21% yield and is U.S. only.

Does anyone invest in this fund? If so what allocation are you using? What are thoughts and perspectives?
I recently changed my mind on this fund & dividend investing. It seems that dividends are more stable than share prices. If volatility is the cause of sequence of return risk, then the sequence of return risk can be reduced if a larger portion of your 4%-rule comes from dividends.

The 2nd link mentions the vanguard fund. Apparently dividend payments were only cut by about 25%, which is much less than the total market drawdown.

Sources: https://awealthofcommonsense.com/2018/0 ... nd-yields/ + https://www.simplysafedividends.com/int ... ar-markets
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Re: Vanguard High Dividend Yield Index Fund

Post by firebirdparts » Sat Feb 01, 2020 12:36 pm

I think that is quite logical for retirement or even near retirement. You’ll get plenty of ugly feedback here in the theory forum but you’ll also get plenty of cash money in the bank.
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Re: Vanguard High Dividend Yield Index Fund

Post by SlowMovingInvestor » Sat Feb 01, 2020 12:41 pm

It went down nearly as much as Vanguard Total Stock Market (-31.91 % to -36,98%) in 2008, and both had a max drawdown of around 50%.

I think that may have been because it had a fair number of financial stocks, which were hit badly.

I might go with the Vanguard Utilities Index instead (VPU) if I wanted 'stable' dividends. Of course, utilities can fail too (PGE).

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Re: Vanguard High Dividend Yield Index Fund

Post by Schlabba » Sat Feb 01, 2020 1:16 pm

SlowMovingInvestor wrote:
Sat Feb 01, 2020 12:41 pm
It went down nearly as much as Vanguard Total Stock Market (-31.91 % to -36,98%) in 2008, and both had a max drawdown of around 50%.

I think that may have been because it had a fair number of financial stocks, which were hit badly.

I might go with the Vanguard Utilities Index instead (VPU) if I wanted 'stable' dividends. Of course, utilities can fail too (PGE).
I was posting about dividend cut and not about total drawdown.

If asset prices are very volatile, perhaps because of speculation and market sentiment, during a crisis you might be selling at a larger discount as compared to receiving dividends.

So if a share is at a 50% discount compared to its peak, you are selling 2$ for 1$. If the company gives you a 25% dividend cut, you are receiving 1.5$ instead of 2$. That 1.5$ clearly came out of the company, but there was no speculative discount.
Secretly a dividend investor. Feel free to ask why.

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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Sat Feb 01, 2020 2:34 pm

Here were my original thoughts. For a retiree (or any investor) who desires additional dividend income, I would think this one fund would compliment the Total Stock Index.

Vanguard High Dividend Yield - 3.17%

REITs - 3.11% but it really is not this high!!! That "yield" for lack of better terms is comprised of three points: dividends, capital gain, and return of capital. Over 1/3 is a "return of capital". The adjusted yield is 2.28% per Vanguard's website: https://personal.vanguard.com/us/FundsY ... undId=5123

Importantly an investor would not be taking specific sector risk.
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Re: Vanguard High Dividend Yield Index Fund

Post by SlowMovingInvestor » Sat Feb 01, 2020 4:16 pm

Schlabba wrote:
Sat Feb 01, 2020 1:16 pm
SlowMovingInvestor wrote:
Sat Feb 01, 2020 12:41 pm
It went down nearly as much as Vanguard Total Stock Market (-31.91 % to -36,98%) in 2008, and both had a max drawdown of around 50%.

I think that may have been because it had a fair number of financial stocks, which were hit badly.

I might go with the Vanguard Utilities Index instead (VPU) if I wanted 'stable' dividends. Of course, utilities can fail too (PGE).
I was posting about dividend cut and not about total drawdown.

If asset prices are very volatile, perhaps because of speculation and market sentiment, during a crisis you might be selling at a larger discount as compared to receiving dividends.

So if a share is at a 50% discount compared to its peak, you are selling 2$ for 1$. If the company gives you a 25% dividend cut, you are receiving 1.5$ instead of 2$. That 1.5$ clearly came out of the company, but there was no speculative discount.
I'm not disputing that. I'm just speculating that VPU might be more stable wrt both dividend yield and drawdowns during market pullbacks. Greater sector concentration, certainly.

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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Sat Feb 01, 2020 4:18 pm

firebirdparts wrote:
Sat Feb 01, 2020 12:36 pm
I think that is quite logical for retirement or even near retirement. You’ll get plenty of ugly feedback here in the theory forum but you’ll also get plenty of cash money in the bank.
Good point. Jack Bogle used to say it was a great feeling to go to the mailbox and find an envelop inside with a dividend check.
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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Sat Feb 01, 2020 4:23 pm

Scooter57 wrote:
Sat Dec 21, 2019 9:59 am
The stocks with high dividends nowadays tend to be those whose dividends include a lot of return of capital (REITS, BDCs), very risky companies, and companies that have borrowed unwisely to provide the money needed for the high dividends that keep investors buying the stock of companies that otherwise have little to offer for the future.
Exactly. I added below:

Vanguard High Dividend Yield - 3.17%

REITs - 3.11% but it really is not this high!!! That "yield" for lack of better terms is comprised of three points: dividends, capital gain, and return of capital. Over 1/3 is a "return of capital". The adjusted yield is 2.28% per Vanguard's website: https://personal.vanguard.com/us/FundsY ... undId=5123

Importantly an investor would not be taking specific sector risk.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Vanguard High Dividend Yield Index Fund

Post by jeffyscott » Sat Feb 01, 2020 5:21 pm

abuss368 wrote:
Sat Feb 01, 2020 4:23 pm
Scooter57 wrote:
Sat Dec 21, 2019 9:59 am
The stocks with high dividends nowadays tend to be those whose dividends include a lot of return of capital (REITS, BDCs), very risky companies, and companies that have borrowed unwisely to provide the money needed for the high dividends that keep investors buying the stock of companies that otherwise have little to offer for the future.
Exactly. I added below:

Vanguard High Dividend Yield - 3.17%

REITs - 3.11% but it really is not this high!!! That "yield" for lack of better terms is comprised of three points: dividends, capital gain, and return of capital. Over 1/3 is a "return of capital". The adjusted yield is 2.28% per Vanguard's website: https://personal.vanguard.com/us/FundsY ... undId=5123

Importantly an investor would not be taking specific sector risk.
The high dividend yield fund specifically excludes REITS and there is no note about part of the yield being a return of capital as there is with the Real Estate Index Fund.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: Vanguard High Dividend Yield Index Fund

Post by MathIsMyWayr » Sat Feb 01, 2020 6:26 pm

Schlabba wrote:
Sat Feb 01, 2020 1:16 pm
SlowMovingInvestor wrote:
Sat Feb 01, 2020 12:41 pm
It went down nearly as much as Vanguard Total Stock Market (-31.91 % to -36,98%) in 2008, and both had a max drawdown of around 50%.

I think that may have been because it had a fair number of financial stocks, which were hit badly.

I might go with the Vanguard Utilities Index instead (VPU) if I wanted 'stable' dividends. Of course, utilities can fail too (PGE).
I was posting about dividend cut and not about total drawdown.

If asset prices are very volatile, perhaps because of speculation and market sentiment, during a crisis you might be selling at a larger discount as compared to receiving dividends.

So if a share is at a 50% discount compared to its peak, you are selling 2$ for 1$. If the company gives you a 25% dividend cut, you are receiving 1.5$ instead of 2$. That 1.5$ clearly came out of the company, but there was no speculative discount.
If your retirement expenses may be met by SS, pension, and 75% of dividend, you are truly retirement FI. Wait a minute, we are talking about a withdrawal rate of around 1.75%.

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Re: Vanguard High Dividend Yield Index Fund

Post by JoMoney » Sat Feb 01, 2020 6:40 pm

FWIW, as already mentioned VYM (Vanguard's High Dividend Yield Index fund) is not "new".
It's also not weighted on the dividend, it's essentially a market-cap weighted index consisting of stocks expected/forecast to pay above average regular dividends excluding REITs.

The "new" (or newer) fund is the international version, Vanguard International High Dividend Yield ETF (VYMI). Which has a higher dividend, but also higher fees, and not qualified dividends like the domestic VYM fund.

The highest dividend "index" I'm aware of, is the S&P 500 High Dividend index ( SPYD ) which equal-weights the top 80 dividend yielding stocks in the S&P 500... It's very heavy in REITs.
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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Sat Feb 01, 2020 6:56 pm

jeffyscott wrote:
Sat Feb 01, 2020 5:21 pm
abuss368 wrote:
Sat Feb 01, 2020 4:23 pm
Scooter57 wrote:
Sat Dec 21, 2019 9:59 am
The stocks with high dividends nowadays tend to be those whose dividends include a lot of return of capital (REITS, BDCs), very risky companies, and companies that have borrowed unwisely to provide the money needed for the high dividends that keep investors buying the stock of companies that otherwise have little to offer for the future.
Exactly. I added below:

Vanguard High Dividend Yield - 3.17%

REITs - 3.11% but it really is not this high!!! That "yield" for lack of better terms is comprised of three points: dividends, capital gain, and return of capital. Over 1/3 is a "return of capital". The adjusted yield is 2.28% per Vanguard's website: https://personal.vanguard.com/us/FundsY ... undId=5123

Importantly an investor would not be taking specific sector risk.
The high dividend yield fund specifically excludes REITS and there is no note about part of the yield being a return of capital as there is with the Real Estate Index Fund.
Didn’t know that and thanks for sharing. I would think because of that the dividends are a higher percentage of qualified.
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Re: Vanguard High Dividend Yield Index Fund

Post by jeffyscott » Sat Feb 01, 2020 7:56 pm

abuss368 wrote:
Sat Feb 01, 2020 6:56 pm
jeffyscott wrote:
Sat Feb 01, 2020 5:21 pm
abuss368 wrote:
Sat Feb 01, 2020 4:23 pm
Scooter57 wrote:
Sat Dec 21, 2019 9:59 am
The stocks with high dividends nowadays tend to be those whose dividends include a lot of return of capital (REITS, BDCs), very risky companies, and companies that have borrowed unwisely to provide the money needed for the high dividends that keep investors buying the stock of companies that otherwise have little to offer for the future.
Exactly. I added below:

Vanguard High Dividend Yield - 3.17%

REITs - 3.11% but it really is not this high!!! That "yield" for lack of better terms is comprised of three points: dividends, capital gain, and return of capital. Over 1/3 is a "return of capital". The adjusted yield is 2.28% per Vanguard's website: https://personal.vanguard.com/us/FundsY ... undId=5123

Importantly an investor would not be taking specific sector risk.
The high dividend yield fund specifically excludes REITS and there is no note about part of the yield being a return of capital as there is with the Real Estate Index Fund.
Didn’t know that and thanks for sharing. I would think because of that the dividends are a higher percentage of qualified.
100% qualified for 2019 and I believe that has been the case in prior years as well.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Sat Feb 01, 2020 8:02 pm

jeffyscott wrote:
Sat Feb 01, 2020 7:56 pm
abuss368 wrote:
Sat Feb 01, 2020 6:56 pm
jeffyscott wrote:
Sat Feb 01, 2020 5:21 pm
abuss368 wrote:
Sat Feb 01, 2020 4:23 pm
Scooter57 wrote:
Sat Dec 21, 2019 9:59 am
The stocks with high dividends nowadays tend to be those whose dividends include a lot of return of capital (REITS, BDCs), very risky companies, and companies that have borrowed unwisely to provide the money needed for the high dividends that keep investors buying the stock of companies that otherwise have little to offer for the future.
Exactly. I added below:

Vanguard High Dividend Yield - 3.17%

REITs - 3.11% but it really is not this high!!! That "yield" for lack of better terms is comprised of three points: dividends, capital gain, and return of capital. Over 1/3 is a "return of capital". The adjusted yield is 2.28% per Vanguard's website: https://personal.vanguard.com/us/FundsY ... undId=5123

Importantly an investor would not be taking specific sector risk.
The high dividend yield fund specifically excludes REITS and there is no note about part of the yield being a return of capital as there is with the Real Estate Index Fund.
Didn’t know that and thanks for sharing. I would think because of that the dividends are a higher percentage of qualified.
100% qualified for 2019 and I believe that has been the case in prior years as well.
Do you invest in the fund?
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Vanguard High Dividend Yield Index Fund

Post by SlowMovingInvestor » Sat Feb 01, 2020 9:47 pm

JoMoney wrote:
Sat Feb 01, 2020 6:40 pm
The "new" (or newer) fund is the international version, Vanguard International High Dividend Yield ETF (VYMI). Which has a higher dividend, but also higher fees, and not qualified dividends like the domestic VYM fund.
Quite a few foreign dividends are taxed at lower (qualified) rates too, depending on tax treaties.

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Re: Vanguard High Dividend Yield Index Fund

Post by JoMoney » Sat Feb 01, 2020 9:52 pm

SlowMovingInvestor wrote:
Sat Feb 01, 2020 9:47 pm
JoMoney wrote:
Sat Feb 01, 2020 6:40 pm
The "new" (or newer) fund is the international version, Vanguard International High Dividend Yield ETF (VYMI). Which has a higher dividend, but also higher fees, and not qualified dividends like the domestic VYM fund.
Quite a few foreign dividends are taxed at lower (qualified) rates too, depending on tax treaties.
Wow, it looks like it will be around 70.95% QDI for 2019, that's more than I would have thought for an "international" fund.
https://advisors.vanguard.com/VGApp/iip ... yeartodate#/!
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Re: Vanguard High Dividend Yield Index Fund

Post by jeffyscott » Sat Feb 01, 2020 10:09 pm

abuss368 wrote:
Sat Feb 01, 2020 8:02 pm
jeffyscott wrote:
Sat Feb 01, 2020 7:56 pm
abuss368 wrote:
Sat Feb 01, 2020 6:56 pm
jeffyscott wrote:
Sat Feb 01, 2020 5:21 pm
abuss368 wrote:
Sat Feb 01, 2020 4:23 pm


Exactly. I added below:

Vanguard High Dividend Yield - 3.17%

REITs - 3.11% but it really is not this high!!! That "yield" for lack of better terms is comprised of three points: dividends, capital gain, and return of capital. Over 1/3 is a "return of capital". The adjusted yield is 2.28% per Vanguard's website: https://personal.vanguard.com/us/FundsY ... undId=5123

Importantly an investor would not be taking specific sector risk.
The high dividend yield fund specifically excludes REITS and there is no note about part of the yield being a return of capital as there is with the Real Estate Index Fund.
Didn’t know that and thanks for sharing. I would think because of that the dividends are a higher percentage of qualified.
100% qualified for 2019 and I believe that has been the case in prior years as well.
Do you invest in the fund?
I have part of our very small taxable account in it. So had looked at dividend history before investing.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: Vanguard High Dividend Yield Index Fund

Post by smectym » Sun Feb 02, 2020 12:42 am

SlowMovingInvestor wrote:
Sat Feb 01, 2020 12:41 pm
It went down nearly as much as Vanguard Total Stock Market (-31.91 % to -36,98%) in 2008, and both had a max drawdown of around 50%.

I think that may have been because it had a fair number of financial stocks, which were hit badly.

I might go with the Vanguard Utilities Index instead (VPU) if I wanted 'stable' dividends. Of course, utilities can fail too (PGE).
SlowMoving, good point about taking a hard look at utilities if implementing a dividend strategy, and I’d add that utilities are a nice diversifier...not as sensitive to global money flows; quite defensive, and in “times of trouble” money streams into utilities. Could 2020 be a “time of trouble?” Who can tell

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Re: Vanguard High Dividend Yield Index Fund

Post by sf_tech_saver » Sun Feb 02, 2020 1:29 am

I track this fund and am considering using a small amount of it to tilt my 89-year-old grandmother's small equity portion towards value. While I'm pretty confident in the total simplicity of the two-fund approach for myself with an at-scale portfolio at 41 years old.....helping my grandmother with a $200k portfolio at 89 is more challenging.

She can essentially more than live off of her pension/SS and her house is paid off etc. For years she kept $125k in a local bank at their horrendous savings rates. She also has $65k in an annuity which has paid 3% interest since 2002. I found this out and at least got her into about $125k of online savings/CDs now with Marcus but as rates continue to drop I broke down and opened a Vanguard account for her.

Because I can pay for her expenses if I have to out of my own income and portfolio I view her low-tax situation (vs. my 53% in CA) as an opportunity to apply a small value tilt for our overall family. I was thinking of blending VTI, VYM, VNQ (REIT) for her tiny $30k equity portion.

The corporate bond fund VCIT is appealing for similar reasons to blend into the typical BND allocation. Both of these moves are yield chasing breaks from the norm but when dealing with a very low tax rate 89-year old I've been open to doing it.

The final allocation to be clear would be something like:

Annuity: (30%)
--$65k in liquid annuity earning 3%. I could try to cash this out and invest but at this point, 3% looks just fine

CDs (28%)
--$60k Marcus 1 year CDs earning 2.15-2.45%

Vanguard (40%, 15% overall equity of total portfolio)
--$10k VNQ
--$10k VTI
--$10k VYM
--$45k VCIT
--$10k BND

It is all much better than a nearly 0% savings account it was parked in for years....

I hope I don't lose my BH cred for this :)
VTI is a modern marvel

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Re: Vanguard High Dividend Yield Index Fund

Post by anil686 » Sun Feb 02, 2020 8:07 am

sf_tech_saver wrote:
Sun Feb 02, 2020 1:29 am
I track this fund and am considering using a small amount of it to tilt my 89-year-old grandmother's small equity portion towards value. While I'm pretty confident in the total simplicity of the two-fund approach for myself with an at-scale portfolio at 41 years old.....helping my grandmother with a $200k portfolio at 89 is more challenging.

She can essentially more than live off of her pension/SS and her house is paid off etc. For years she kept $125k in a local bank at their horrendous savings rates. She also has $65k in an annuity which has paid 3% interest since 2002. I found this out and at least got her into about $125k of online savings/CDs now with Marcus but as rates continue to drop I broke down and opened a Vanguard account for her.

Because I can pay for her expenses if I have to out of my own income and portfolio I view her low-tax situation (vs. my 53% in CA) as an opportunity to apply a small value tilt for our overall family. I was thinking of blending VTI, VYM, VNQ (REIT) for her tiny $30k equity portion.

The corporate bond fund VCIT is appealing for similar reasons to blend into the typical BND allocation. Both of these moves are yield chasing breaks from the norm but when dealing with a very low tax rate 89-year old I've been open to doing it.

The final allocation to be clear would be something like:

Annuity: (30%)
--$65k in liquid annuity earning 3%. I could try to cash this out and invest but at this point, 3% looks just fine

CDs (28%)
--$60k Marcus 1 year CDs earning 2.15-2.45%

Vanguard (40%, 15% overall equity of total portfolio)
--$10k VNQ
--$10k VTI
--$10k VYM
--$45k VCIT
--$10k BND

It is all much better than a nearly 0% savings account it was parked in for years....

I hope I don't lose my BH cred for this :)
You could keep it simpler (JMO) if you want our of the remaining 140K about 50% CD/Bond to keep in either in a LS 40/60 or LS 60/40 fund (instead of 75 K equity/70 K bond and CD) - both would be about the same and you would not need to tinker with rebalancing at all. Since tax considerations were not much of an issue, you could even use a TR fund like 2020 and use that forever without changing it. I doubt the performance of either of those would be significantly different considering the equity/bond ratio and it would be simpler. Again JMO....

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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Sun Feb 02, 2020 9:32 am

sf_tech_saver wrote:
Sun Feb 02, 2020 1:29 am
I track this fund and am considering using a small amount of it to tilt my 89-year-old grandmother's small equity portion towards value. While I'm pretty confident in the total simplicity of the two-fund approach for myself with an at-scale portfolio at 41 years old.....helping my grandmother with a $200k portfolio at 89 is more challenging.

She can essentially more than live off of her pension/SS and her house is paid off etc. For years she kept $125k in a local bank at their horrendous savings rates. She also has $65k in an annuity which has paid 3% interest since 2002. I found this out and at least got her into about $125k of online savings/CDs now with Marcus but as rates continue to drop I broke down and opened a Vanguard account for her.

Because I can pay for her expenses if I have to out of my own income and portfolio I view her low-tax situation (vs. my 53% in CA) as an opportunity to apply a small value tilt for our overall family. I was thinking of blending VTI, VYM, VNQ (REIT) for her tiny $30k equity portion.

The corporate bond fund VCIT is appealing for similar reasons to blend into the typical BND allocation. Both of these moves are yield chasing breaks from the norm but when dealing with a very low tax rate 89-year old I've been open to doing it.

The final allocation to be clear would be something like:

Annuity: (30%)
--$65k in liquid annuity earning 3%. I could try to cash this out and invest but at this point, 3% looks just fine

CDs (28%)
--$60k Marcus 1 year CDs earning 2.15-2.45%

Vanguard (40%, 15% overall equity of total portfolio)
--$10k VNQ
--$10k VTI
--$10k VYM
--$45k VCIT
--$10k BND

It is all much better than a nearly 0% savings account it was parked in for years....

I hope I don't lose my BH cred for this :)
I would pass on REIT as the adjusted yield is 2.28% compared to 3.21% for High Yield Fund. Perhaps Total Stock and High Yield and pass on the sector REIT Fund.

Total Bond and if you wanted to mix some corporate in that may be fine. Jack Bogle talked about this a little a few years back when rates were very low.
Last edited by abuss368 on Sun Apr 05, 2020 8:29 pm, edited 2 times in total.
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Re: Vanguard High Dividend Yield Index Fund

Post by sf_tech_saver » Sun Feb 02, 2020 12:03 pm

abuss368 wrote:
Sun Feb 02, 2020 9:32 am
sf_tech_saver wrote:
Sun Feb 02, 2020 1:29 am
I track this fund and am considering using a small amount of it to tilt my 89-year-old grandmother's small equity portion towards value. While I'm pretty confident in the total simplicity of the two-fund approach for myself with an at-scale portfolio at 41 years old.....helping my grandmother with a $200k portfolio at 89 is more challenging.

She can essentially more than live off of her pension/SS and her house is paid off etc. For years she kept $125k in a local bank at their horrendous savings rates. She also has $65k in an annuity which has paid 3% interest since 2002. I found this out and at least got her into about $125k of online savings/CDs now with Marcus but as rates continue to drop I broke down and opened a Vanguard account for her.

Because I can pay for her expenses if I have to out of my own income and portfolio I view her low-tax situation (vs. my 53% in CA) as an opportunity to apply a small value tilt for our overall family. I was thinking of blending VTI, VYM, VNQ (REIT) for her tiny $30k equity portion.

The corporate bond fund VCIT is appealing for similar reasons to blend into the typical BND allocation. Both of these moves are yield chasing breaks from the norm but when dealing with a very low tax rate 89-year old I've been open to doing it.

The final allocation to be clear would be something like:

Annuity: (30%)
--$65k in liquid annuity earning 3%. I could try to cash this out and invest but at this point, 3% looks just fine

CDs (28%)
--$60k Marcus 1 year CDs earning 2.15-2.45%

Vanguard (40%, 15% overall equity of total portfolio)
--$10k VNQ
--$10k VTI
--$10k VYM
--$45k VCIT
--$10k BND

It is all much better than a nearly 0% savings account it was parked in for years....

I hope I don't lose my BH cred for this :)
I would pass on REIT as the adjusted yield is 2.28% compared to 3.21% for High Yield Fund. Perhaps Total Stock and High Yield and pass on the sector REIT Fund.

Total Bond and if you wanted to mix some corporate in that may be fine. Jack Bogle talk about this a little a few years back when rates were very low.
Thanks -- agree completely. I think it was just a little fun of owning a tax prohibitive ETF/REIT I couldn't have on my side to track it a bit that added the complexity.

Appreciate the feedback on the biggest bet here which is blending in some of the corporate bonds given the high CD counterbalance.
VTI is a modern marvel

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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Sun Feb 02, 2020 12:32 pm

sf_tech_saver wrote:
Sun Feb 02, 2020 12:03 pm
abuss368 wrote:
Sun Feb 02, 2020 9:32 am
sf_tech_saver wrote:
Sun Feb 02, 2020 1:29 am
I track this fund and am considering using a small amount of it to tilt my 89-year-old grandmother's small equity portion towards value. While I'm pretty confident in the total simplicity of the two-fund approach for myself with an at-scale portfolio at 41 years old.....helping my grandmother with a $200k portfolio at 89 is more challenging.

She can essentially more than live off of her pension/SS and her house is paid off etc. For years she kept $125k in a local bank at their horrendous savings rates. She also has $65k in an annuity which has paid 3% interest since 2002. I found this out and at least got her into about $125k of online savings/CDs now with Marcus but as rates continue to drop I broke down and opened a Vanguard account for her.

Because I can pay for her expenses if I have to out of my own income and portfolio I view her low-tax situation (vs. my 53% in CA) as an opportunity to apply a small value tilt for our overall family. I was thinking of blending VTI, VYM, VNQ (REIT) for her tiny $30k equity portion.

The corporate bond fund VCIT is appealing for similar reasons to blend into the typical BND allocation. Both of these moves are yield chasing breaks from the norm but when dealing with a very low tax rate 89-year old I've been open to doing it.

The final allocation to be clear would be something like:

Annuity: (30%)
--$65k in liquid annuity earning 3%. I could try to cash this out and invest but at this point, 3% looks just fine

CDs (28%)
--$60k Marcus 1 year CDs earning 2.15-2.45%

Vanguard (40%, 15% overall equity of total portfolio)
--$10k VNQ
--$10k VTI
--$10k VYM
--$45k VCIT
--$10k BND

It is all much better than a nearly 0% savings account it was parked in for years....

I hope I don't lose my BH cred for this :)
I would pass on REIT as the adjusted yield is 2.28% compared to 3.21% for High Yield Fund. Perhaps Total Stock and High Yield and pass on the sector REIT Fund.

Total Bond and if you wanted to mix some corporate in that may be fine. Jack Bogle talk about this a little a few years back when rates were very low.
Thanks -- agree completely. I think it was just a little fun of owning a tax prohibitive ETF/REIT I couldn't have on my side to track it a bit that added the complexity.

Appreciate the feedback on the biggest bet here which is blending in some of the corporate bonds given the high CD counterbalance.
I would consider simplifying even more. Perhaps as much cash as needed in a money market account and the rest in the bond funds.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Thu Feb 13, 2020 10:51 pm

This has been a very informative thread.

Thanks Bogleheads!
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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Sat Feb 22, 2020 3:31 pm

I did not add this fund to our portfolio as I wanted to better learn about it.
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Re: Vanguard High Dividend Yield Index Fund

Post by abuss368 » Sat Feb 22, 2020 6:45 pm

Here is one observation: The REIT fund has an adjusted yield is 2.21% and that is historically very low. It appears that REITs today do not provide anywhere near the yield of years ago when they were 4% - 8%. In addition, REIT income is taxed at ordinary income rates (after 2018 one may have up to a 20% QBI deduction).

The High Dividend Yield fund is presently yielding 3.27% and this is taxed at lower qualified rates of 15%.

While more of a value play the investor avoids sector risk.

Please share thoughts and perspectives.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Vanguard High Dividend Yield Index Fund

Post by Longtermgrowth » Sat Feb 22, 2020 9:32 pm

There have been a number of Morningstar articles speaking favorably about Vanguard High Dividend Yield Index over the years. A lot of them discuss the ETF version, VYM.
Here's one from not too long ago: https://www.morningstar.com/articles/95 ... k-in-check

It really is a value play, as you mentioned. Here's a factor regression of VYM (Vanguard High Dividend Yield ETF) and VTV (Vanguard Value ETF): https://www.portfoliovisualizer.com/fac ... sion=false

One thought is that it doesn't have to be just one or the other; could tilt to value and REITs.
Also doesn't have to be 100% US REITs.
Have you checked the yield on Vanguard's international REIT fund?

I hold a good bit of VYM, by the way.
Also hold some REET (iShares Global REIT ETF). Since it will remain a small holding, I like that it includes higher yielding international REITs in one fund.

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Re: Vanguard High Dividend Yield Index Fund

Post by fortyofforty » Sat Feb 22, 2020 9:41 pm

abuss368 wrote:
Sat Feb 22, 2020 6:45 pm
Here is one observation: The REIT fund has an adjusted yield is 2.21% and that is historically very low. It appears that REITs today do not provide anywhere near the yield of years ago when they were 4% - 8%. In addition, REIT income is taxed at ordinary income rates (after 2018 one may have up to a 20% QBI deduction).

The High Dividend Yield fund is presently yielding 3.27% and this is taxed at lower qualified rates of 15%.

While more of a value play the investor avoids sector risk.

Please share thoughts and perspectives.
abuss:

I have a tiny (proportionally) amount invested in this VYM (not HYM) ETF, and its sister VYMI (not HYMI) international high dividend yield ETF. It is clearly a value play, at this point, and the yield isn't much higher than the overall market. I do like the low P/Es, which are much lower than the overall market, and they're both in a tax-managed Roth. With growth leading the way, and domestic outperforming international, VYMI has been hit with a double whammy, of late. I was wondering whether an index could replicate some of the processes used by Benjamin Graham in selecting deep value companies.
Last edited by fortyofforty on Sun Feb 23, 2020 12:55 pm, edited 2 times in total.

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Re: Vanguard High Dividend Yield Index Fund

Post by Longtermgrowth » Sun Feb 23, 2020 11:49 am

fortyofforty wrote:
Sat Feb 22, 2020 9:41 pm
I have a tiny (proportionally) amount invested in this HYM ETF, and its sister HYMI international high dividend yield ETF.
Just to avoid confusion for anyone reading this, you must mean VYM (Vanguard High Dividend Yield ETF) and VYMI (Vanguard International High Dividend Yield ETF).

Looks like the 30-day SEC Yield of VYMI is 4.18%.

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Re: Vanguard High Dividend Yield Index Fund

Post by fortyofforty » Sun Feb 23, 2020 11:58 am

Longtermgrowth wrote:
Sun Feb 23, 2020 11:49 am
fortyofforty wrote:
Sat Feb 22, 2020 9:41 pm
I have a tiny (proportionally) amount invested in this HYM ETF, and its sister HYMI international high dividend yield ETF.
Just to avoid confusion for anyone reading this, you must mean VYM (Vanguard High Dividend Yield ETF) and VYMI (Vanguard International High Dividend Yield ETF).

Looks like the 30-day SEC Yield of VYMI is 4.18%.
Yes, good catch. I'm not a "ticker symbol" guy and it shows. Fixed the original.

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Re: Vanguard High Dividend Yield Index Fund

Post by nedsaid » Sun Feb 23, 2020 1:58 pm

abuss368 wrote:
Fri Dec 20, 2019 9:45 pm
Bogleheads -

This is a new fund from Vanguard with an inception date of 2/7/2019 for Admiral shares. The fund presently has a 3.21% yield and is U.S. only.

Does anyone invest in this fund? If so what allocation are you using? What are thoughts and perspectives?
Not a recommendation but I have considered holding Vanguard High Dividend Index ETF in lieu of the individual stocks in my retirement portfolio. Reason being that I see a lot of my individual holdings in the top 25 holdings of this ETF. It seems to hold the kind of stocks that I prefer, Value oriented with a bit higher dividend yield than the market itself. As I inch closer to retirement, I find myself more interested in income.
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Re: Vanguard High Dividend Yield Index Fund

Post by Schlabba » Sun Feb 23, 2020 2:14 pm

nedsaid wrote:
Sun Feb 23, 2020 1:58 pm
abuss368 wrote:
Fri Dec 20, 2019 9:45 pm
Bogleheads -

This is a new fund from Vanguard with an inception date of 2/7/2019 for Admiral shares. The fund presently has a 3.21% yield and is U.S. only.

Does anyone invest in this fund? If so what allocation are you using? What are thoughts and perspectives?
Not a recommendation but I have considered holding Vanguard High Dividend Index ETF in lieu of the individual stocks in my retirement portfolio. Reason being that I see a lot of my individual holdings in the top 25 holdings of this ETF. It seems to hold the kind of stocks that I prefer, Value oriented with a bit higher dividend yield than the market itself. As I inch closer to retirement, I find myself more interested in income.
Sounds great to me. According to viewtopic.php?f=10&t=304586 a little value tilt might help, and receiving dividends is a great :happy
Secretly a dividend investor. Feel free to ask why.

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