VYM offers additional leverage to the shareholder rewards theme via its 12.4% weight to the financial services sector. For example, Dow component J.P. Morgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) combine for 5.8% of VYM’s weight. J.P. Morgan Chase and Wells Fargo were among the large banks that passed the Federal Reserve’s recent stress tests, which allows the banks to boost buybacks and dividends. [Bank on These Bank ETFs]
“The mitigating risk aspect is exemplified during bear markets where VYM outperformed the S&P 500 4.9% and 8.4%, respectively in 2008 and 2014. VYM provides a compelling investment opportunity for investors seeking diversity across the large-cap space while mitigating risk and attaining a high yield and overall equity appreciation,” adds Kiedrowski.
In a departure from some of its dividend ETF rivals, VYM features an 18.8% weight to the technology sector, one of the largest among dividend ETFs. Apple, VYM’s largest holding has plenty of dividend growth potential due to its pristine balance sheet and $178 billion in cash. Microsoft (NasdaqGS: MSFT), VYM’s second-largest tech holding and third-largest holding overall, has nearly doubled its dividend over the past four years.
Vanguard High Dividend Yield ETF
