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5 Low-Cost Vanguard Funds for Dividend Income
February 28, 2021 6:03 AM newsfeedback@fool.com (Catherine Brock)
Posted:
Updated:
March 2, 2021 5:37 AM
Vanguard launched the first index fund in the 1970s and has since become a leader in low-cost investing. The premise of low-cost investing is straightforward. Lower fund fees allow a greater share of investment returns to pass through to shareholders. Vanguard lives that premise with its index funds as well as its actively managed funds. If you’re looking for a cost-efficient mutual or exchange-traded fund (ETF) in any niche, including dividend stocks, the Vanguard fund family likely has what you need.
Here are five low-cost Vanguard dividend funds that can turn your portfolio into a cash machine.
“VYMI goes overseas in search of dividend income and what it does is it looks at the entire equity opportunity set outside the U.S. It takes the highest-yielding half of those stocks, and it folds them into its portfolio, weighting them by their market capitalization,” said Morningstar’s Ben Johnson.
Ex-U.S. developed market dividend payers often feature larger yields than their U.S. counterparts, an assertion proven by comparing large- and mega-cap dividend stocks from familiar dividend sectors such as consumer staples, energy, financial services and telecommunications.
VYMI’s Steady Approach
Many foreign companies tie payouts to earnings, meaning some ex-US dividend growers also have rising profitability. Those firms aren’t burdened by dividends and can sustain payouts.