Therefore, even if you normally prefer US stocks to foreign stocks in your taxable accounts (because you are in a high-tax state, in a very high federal tax bracket, or in some phase-out, and thus want to minimize total dividends), you should probably prefer foreign value ETFs over US value ETFs.
For each fund, the dividend yield is computed as the taxable dividend divided by the 12/31/20 share price. Note that this will be more than the distribution yield for international funds, because of the foreign tax credit. To compute your tax cost, take
Dividend yield * [(Qualified percentage*QDI tax rate)+((1-Qualified percentage)*normal tax rate)-FTC]
For example, a fund with 70% qualified dividends and 8% foreign tax has a tax cost in a 24% bracket of (.7*.15+.3*.24-.08)=9.7% of its dividend yield, or 0.19% if the dividend yield is 2.00% (and the distribution yield is 1.84%).
2020 dividends were unusually low; historical yields were about 50% higher for both US and foreign stocks, and dividends may go back up in the future. Thus you might want to add 50% to all the estimated tax costs from the table, with no change from the relative order.
The table below includes the non-factor but popular VBR, and includes the blend indexes for comparison. Note that the large-cap Avantis funds (AVUS, AVDE, AVEM) don't offer that much value exposure.
Code: Select all
Ticker Name Yield FTC Qualified VTI Vanguard Total Stock Market 1.32% 0% 96% VB Vanguard Small-Cap 1.15% 0% 75% VBR Vanguard Small-Cap Value 1.38% 0% 84% VFVA Vanguard Factor Value 2.04% 0% 100% AVUS Avantis US Equity 1.19% 0% 100% AVUV Avantis US Small-Cap Value 1.21% 0% 100% VXUS Vanguard Total International 2.36% 9.3% 72% VSS Vanguard FTSE Ex-US Small-Cap 2.15% 12.1% 56% IVLU iShares MSCI Factor Value (large-cap) 2.27% 9.5% 100% AVDE Avantis International (large-cap) 1.74% 6.4% 79% AVDV Avantis International Small-Cap Value 1.73% 3.6% 55% AVEM Avantis Emerging Markets 1.75% 8.4% 63%
(additional edit to correct title, since US ETFs are discussed as well)
(third edit to group funds properly by market type)