VTI vs VOO [does size of dividend matter?]

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EMH3335
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VTI vs VOO [does size of dividend matter?]

Post by EMH3335 »

I just noticed. that the dividend at the end of the year for VTI was .9305 and VOO was 1.672. I am invested in VTI but not VOO. Would it be better to be in VOO with that big of a difference in dividend?
Triple digit golfer
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Re: VTI vs VOO [does size of dividend matter?]

Post by Triple digit golfer »

No. Dividend is in proportion to share price. You have to look at the percentage, and not just at the year end dividend.
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RetirementClass2021
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Re: VTI vs VOO [does size of dividend matter?]

Post by RetirementClass2021 »

VTI holdings: 3995 companies
VOO holdings: 509 companies

VTI wins out
VTI 30% VXUS 12% SCHD 18% BND 12% BNDX 8% SCHP 20% | Low-cost diversified portfolio | “Forget the needle, buy the haystack.” - John C. Bogle
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Orangutan
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Re: VTI vs VOO [does size of dividend matter?]

Post by Orangutan »

Not at all. And +1 to above, though it doesn't matter all too much. https://www.portfoliovisualizer.com/bac ... sisResults
Hyperchicken
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Re: VTI vs VOO [does size of dividend matter?]

Post by Hyperchicken »

Is that in taxable or tax-advantaged account?
dbr
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Re: VTI vs VOO [does size of dividend matter?]

Post by dbr »

The 30 day SEC yield on VOO is 1.69%. For VTI it is 1.65%. Distribution yield, which is computed from the actual past dividends would be similarly close. In Portfolio Visualizer you can get an annual table of income (dividends) and dividend yield for a starting investment of $10,000 in either fund. Share price and number of shares are not displayed because those are irrelevant nor is the dividend per share.

It is good, though, to distinguish dividend, which is the dollars paid per share, from yield, which is the ratio of that to share price, expressed as a percent.
Apathizer
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Re: VTI vs VOO [does size of dividend matter?]

Post by Apathizer »

No, total return is all that matters, and dividends are irrelevant to total return. There numerous threads explaining this, so I won't go down the rabbit hole of redundancy.
ROTH: 35% AVGE, 20% AVUS, 15% DFAX, 30% BNDW. Taxable: 50% BNDW, 25% AVGE, 15% AVUS, 10% DFAX
Doctor Rhythm
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Re: VTI vs VOO [does size of dividend matter?]

Post by Doctor Rhythm »

Welcome to the forum

You’re asking a great question. Dividends are confusing for many people, and I had a lot of misconceptions about them for a long time.

As others have said, it may be easier to think in terms of percentages rather than actual dollars & cents. Would you rather have an investment that gains $10 per share or one that gains $5 per share? The answer depends on the price per share. But if I say one investment had 10% return and the other had 15% return, you know immediately which performed better.

The other thing to remember is that you’re only paying yourself with stock dividends. It’s money you are forced to withdraw from your own business’ cash reserves, so your business is now worth less. This is why total return is the most relevant performance as it includes both dividend payout and change in share price. Most people on this forum don’t really care about dividends, or to the extent they occur in taxable accounts, actually try to minimize them.
the_wiki
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Re: VTI vs VOO [does size of dividend matter?]

Post by the_wiki »

RetirementClass2021 wrote: Mon Jan 23, 2023 5:04 pm VTI holdings: 3995 companies
VOO holdings: 509 companies

VTI wins out
The extra companies VTI holds are weighted so small they they don't actually do anything for the portfolio. It's more of a faith-based benefit. You've already reach full market diversification by the 500th company, which is why Standard & Poor set the index up that way long ago.

If we compare these actual Vanguard funds since they began as mutual funds in the 90s, S&P500 wins by a nose:

https://www.portfoliovisualizer.com/bac ... ion2_2=100

If we compare general indexes since 1972, Total Market wins by an eyelash

https://www.portfoliovisualizer.com/bac ... ion2_2=100


So you can buy VTI because those extra microscopic holdings don't hurt, or you can go VOO because they don't help. In the end you will be at the same place.

As has been said, total return is all that matters, as and those link above show, they will end up being the same so no point in switching funds.
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