ETFs and dividend-paying stocks

[kjm]

I have two questions regarding ETFs that hold dividend-paying stocks.

1 Let's say I own VYM. It holds AT&T which currently sports a 6% dividend yield. How does VYM return the value of that dividend to me? Does the NAV increase by a corresponding amount every time T pays out that dividend?

2 Why hasn't VYM paid out a dividend since June of last year?

[ResearchMed]

Not sure where you are looking about the dividends: My graph on Schwab shows regular quarterly dividends through June, 2009. (Might you be looking at an old version of some chart?)

I don't know about your other question, but I'm eager to learn the answer.

RM

[drjdpowell]

I have two questions regarding ETFs that hold dividend-paying stocks.

1 Let's say I own VYM. It holds AT&T which currently sports a 6% dividend yield. How does VYM return the value of that dividend to me? Does the NAV increase by a corresponding amount every time T pays out that dividend?

Yes. (added later: though the NAV goes up to include the cash of the dividend, AT&T's stock price would likely have dropped due to the payout of the dividend, and thus the NAV probably doesn't change much on the dividend day)

2 Why hasn't VYM paid out a dividend since June of last year?

According to vanguard.com, VYM has paid 4 dividends since June of 2008, the last being $0.28 two months ago.

-- James

[kjm]

I see. I was looking at the VYM on Google Finance. Thanks for the responses.

[yobria]

Btw, AT&T is effectively borrrowing money and paying it out in dividends, causing it to be taxed twice. They had $60B in LT debt, $169B total liabilities as of 12/31/08 (Don't worry, they have plenty of assets - $72B in "goodwill", $64B in "intangible assets") But hey investors love divs, so let's keep churning them out! This is why high div stocks are no free lunch.

Nick