The old adage of “no risk, no reward” can certainly ring true for the yield. It can also apply to the current market environment where bond yields may not be sufficient for fixed income investors, which makes dividends an option.
“Perhaps the biggest challenge for income investors is balancing yield and risk. Ideally, you’d want the highest yield possible with the least amount of risk,” a Motley Fool article notes.
One option to consider is the Vanguard High Dividend Yield Index Fund ETF Shares (VYM). The fund employs an indexing investment approach designed to track the performance of the FTSE High Dividend Yield Index, which consists of common stocks of companies that pay dividends that generally are higher than average.
In summary, VYM:
- Seeks to track the performance of the FTSE® High Dividend Yield Index, which measures the investment return of common stocks of companies characterized by high dividend yields.
- Provides a convenient way to track the performance of stocks that are forecasted to have above-average dividend yields.
- Follows a passively managed, full-replication approach.
- Has a 30-day SEC yield of 2.75% as of February 28.
An International Option
Venturing into the equities markets abroad could also literally and metaphorically pay dividends. One prime option is the Vanguard International High Dividend Yield ETF (VYMI).
VYMI offers an all-in-one option, allowing investors to navigate the international debt markets without needing to pore over copious amounts of financial data to find the best opportunities. Furthermore, international investing has its own set of nuances, and VYMI can assist with taking out that guesswork.
- Seeks to track the performance of the FTSE All-World ex US High Dividend Yield Index.
- Provides a convenient way to get exposure to international stocks that are forecasted to have above-average dividend yields.
- Employs a passively managed sampling strategy.
- Has a 12-month yield of 4.3% based on Morningstar data.
For more news, information, and strategy, visit the Fixed Income Channel.