VIG vs. VYM is the core dividend ETF debate for Vanguard investors. Both are low-cost, highly liquid, and designed for dividend-focused portfolios — but they have fundamentally different strategies. VIG prioritises dividend growth; VYM prioritises current yield. The right choice depends on whether you need income now or income that grows over time.
Quick Comparison: VIG vs. VYM
| Feature | VIG | VYM |
|---|---|---|
| Full name | Vanguard Dividend Appreciation ETF | Vanguard High Dividend Yield ETF |
| Expense ratio | 0.06% | 0.06% |
| Index | S&P US Dividend Growers Index | FTSE High Dividend Yield Index |
| Holdings | ~300 stocks | ~550 stocks |
| Dividend yield | ~1.6–1.9% | ~3.0–3.5% |
| Dividend growth (10-yr) | ~7–10%/yr | ~4–6%/yr |
| Top sectors | Technology, Healthcare, Consumer | Financials, Energy, Consumer |
| Total return (10-yr, approx.) | ~11–13%/yr | ~9–11%/yr |
| AUM | $90B+ | $65B+ |
| Inception date | 2006 | 2006 |
What Is VIG?
VIG (Vanguard Dividend Appreciation ETF) tracks the S&P US Dividend Growers Index. To be included:
- A company must have increased its dividend for at least 10 consecutive years
- The index then weights included stocks by market capitalisation
- High-yield stocks that cut dividends are excluded
VIG’s strategy: Focus on financially healthy companies that consistently raise their dividends — a signal of durable earnings power. This tilts VIG toward quality: low debt, consistent earnings, strong cash flows.
VIG top holdings (approximate):
- Microsoft
- Apple
- Broadcom
- JPMorgan Chase
- UnitedHealth Group
- ExxonMobil
- Visa
- Costco
- Procter & Gamble
- Johnson & Johnson
Notice: technology and healthcare heavyweights appear prominently — many of these companies have been raising dividends aggressively as their cash flows have grown.
What Is VYM?
VYM (Vanguard High Dividend Yield ETF) tracks the FTSE High Dividend Yield Index, which includes stocks forecast to pay above-average dividends. Real estate investment trusts (REITs) are excluded.
VYM’s strategy: Buy the highest-yielding stocks in the broad US market. This tilts VYM toward mature, cash-generating sectors: financials, energy, industrials, and consumer staples.
VYM top holdings (approximate):
- JPMorgan Chase
- Broadcom
- Exxon Mobil
- Johnson & Johnson
- Procter & Gamble
- Home Depot
- AbbVie
- Chevron
- Bank of America
- Merck
VYM holds ~550 stocks vs. VIG’s ~300 — broader diversification but more exposure to mature, slower-growing companies.
VIG vs. VYM: The Yield Trade-Off
The central difference: VIG yields ~1.7%, VYM yields ~3.2%. But VIG’s dividends grow faster:
| Year | VIG dividend (if starting at $1.70) | VYM dividend (if starting at $3.20) |
|---|---|---|
| Year 0 | $1.70 | $3.20 |
| Year 5 (VIG at 8%/yr growth, VYM at 5%/yr) | $2.50 | $4.08 |
| Year 10 | $3.67 | $5.21 |
| Year 15 | $5.40 | $6.65 |
| Year 20 | $7.92 | $8.48 |
At year 20, VIG’s faster dividend growth nearly catches VYM’s higher starting yield. For investors with 20+ year horizons, VIG can deliver comparable or higher income — and likely higher total portfolio value — than VYM.
For investors needing income now: VYM’s 3.2% yield is more immediate. A $500,000 VYM position generates approximately $16,000/year in dividends — meaningful retirement income. The same $500,000 in VIG generates approximately $8,500–$9,500/year.
Performance: VIG vs. VYM (Total Return)
Over most 5–10 year periods since 2006, VIG has slightly outperformed VYM on total return (price appreciation + dividends reinvested):
| Period | VIG (approx. total return) | VYM (approx. total return) |
|---|---|---|
| 5-year (2021–2025) | ~13–15%/yr | ~11–13%/yr |
| 10-year (2016–2025) | ~11–13%/yr | ~9–11%/yr |
| Since inception (2006–2025) | ~9–11%/yr | ~8–10%/yr |
VIG’s slightly higher total return reflects the strong performance of its technology and healthcare heavy-hitters. In a period where financial and energy stocks dominate (typically rising rate environments), VYM can close the gap or outperform.
VIG vs. VYM vs. SCHD
For completeness, comparing all three major dividend ETFs:
| Feature | VIG | VYM | SCHD |
|---|---|---|---|
| Strategy | Dividend growth (10+ years) | High current yield | Quality dividend companies |
| Expense ratio | 0.06% | 0.06% | 0.06% |
| Yield | ~1.7% | ~3.2% | ~3.4% |
| Dividend growth | ~7–10%/yr | ~4–6%/yr | ~8–12%/yr |
| Holdings | ~300 | ~550 | ~100 |
| Manager | Vanguard | Vanguard | Schwab |
SCHD vs. VYM and SCHD vs. VIG cover those comparisons in detail.
When to Choose VIG
- You have a 15–20+ year investment horizon and want dividend income that grows over time
- You want quality-tilted large caps (low debt, consistent cash flows)
- You believe technology and healthcare companies will continue to raise dividends aggressively
- You’re comfortable with a lower current yield (1.7%) in exchange for higher growth
When to Choose VYM
- You need income now — retired or semi-retired with near-term cash flow needs
- You want broader diversification (~550 stocks vs. VIG’s ~300)
- You prefer value-oriented exposure — financials, energy, consumer staples over tech-heavy VIG
- You want the highest possible current yield from a Vanguard ETF
Internal Links
- VIG ETF 2026 Review
- SCHD vs. VYM: which dividend ETF?
- SCHD vs. VIG: Schwab vs. Vanguard dividend ETF
- VOO ETF Review
- Vanguard custodial account guide
- Vanguard investing hub
Bottom Line
VIG and VYM are both excellent dividend ETFs at the same 0.06% expense ratio. Choose VIG if you have a long horizon and want dividend growth — your dividends will compound faster and likely produce higher total wealth over 20+ years. Choose VYM if you need immediate income — its 3.2% current yield provides nearly double VIG’s income from day one. Many dividend investors hold both to balance growth and current income.
This article is for educational purposes only and does not constitute personalised investment advice.
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