Vanguard High Dividend Yield (VYM) – 18% More of a Reason to Invest!

Vanguard

Vanguard, one of the world’s biggest investment management companies – at over $6 trillion of assets under management, just released their distributions for Quarter 1 2021.

The community should know this, but I’ve been heavily investing in Vanguard’s High Dividend Yield ETF (VYM) for the better part of 7+ months.  The dividend increase news had a tremendous impact on not just my passive income source – in terms of dividend income – but solidifies my investment strategy going forward!  Let’s see why.

Vanguard High Dividend Yield (VYM) ETF Dividend INcrease

Vanguard recently released, as they do each quarter, the distribution list for their exchange traded funds (ETFs) and mutual funds.  Obviously, I have deep interest into Vanguard’s High Dividend Yield ETF (VYM).

Vanguard’s first quarter dividend for 2021 is in the amount of $0.65640.  This is far superior than the first quarter for 2020, which had the amount of $0.55440.  See the distribution chart below, directly from Vanguard’s VYM page:

Do you see what % of an increase that equates to?  We are talking about 18.4% baby!  Obviously that is only for one quarter, therefore, someone could argue, you could multiply that by 25%, for just one quarter’s worth of an increase.

This could be representing significant, positive signs for investors and dividend investor’s alike.  2021 has been a great year for dividend increases and if Vanguard’s exchange traded fund is an indication, the next 9 months will be very exciting!

You may be wondering – what is the impact to my dividend stock portfolio?  Here is how many shares I own:

Therefore, the impact at 116 shares for a 10 cent increase was approximately $11.83 to my forward income in my taxable stock brokerage account.  I also own shares (106) in my IRA account, therefore, a nice little bump was received there as well.

In total, well over $20+ in forward dividend income  added.  This is as passive of investing that it gets.  Owning a dividend growing ETF that isn’t hand picking stocks, that I have been purchasing on yes – a weekly basis (except one week – 3/15!).

What does that mean for me and my continual investment into Vanguard’s High Dividend Yield ETF (VYM)?

My investment strategy with VYM – do I continue?

The question and comments I have been receiving lately as VYM has approached AND crossed the $100 share price is – do I continue my investing strategy?  See stock price chart below:

As you can see the price has surged from the $80 mark back in the fall, to over $101 as of close of business on March 26th, 2021.  A nice little 25% bump – not too shabby.

However, due to yield getting lower as we were approaching mid-March/$100 mark – the yield based on previous trailing 12 month dividends, actually dipped not just below 3%, but below 2.9%.  Therefore, for ONE WEEK of 3/15 – I actually did not purchase VYM, as we do each month (my wife and I).  Yes, I withdrew the strategy.  But wait…

The BIG NEWS happened, as discussed above.  Vanguard announced this massive first quarter dividend increase of over 18%, which immediately brought the dividend yield BACK UP!

The yield is now hovering back around 3%, therefore – the strategy is continuing and I added more this week of 3/22, baby!

There are 40 weeks left of the year.  My wife and I each buy 3 shares, or a total of 6 per week.  Therefore, there is potential of 240 more shares of Vanguard baby!  At an annual dividend $3.00 (approximately), this equates to $720 in forward dividend to be added.  Loving it baby!

Conclusion on Vanguard

There you have it.  I am keeping my Vanguard investing strategy – buying 3 shares each, per week, for my wife and I.

This dividend increase could be very POSITIVE for the rest of the dividend investing community for the remainder of 2021.

If we continue to do this, we stand to generate, potentially, over $720 in forward dividend income.  Now that’s called taking significant steps to financial freedom baby!

How about you?  Own Vanguard’s VYM?  Happy with the increase and believe it’s a great sign for the dividend investing community?  Share the feedback in the comments!  As always, good luck and happy investing folks!

-Lanny

8 thoughts on “Vanguard High Dividend Yield (VYM) – 18% More of a Reason to Invest!

  1. The next quarter dividend is normally one of the best of the year. This is what I switched over to in 2008 when all those dividend cuts started to happen to my portfolio. With VYM you know you will not get cut to $0.

      • VYM – 5,965 shares. Best 100% QDI ETF for income, I have found. No more ending of the dividend that hit your passive income stream or corporate mergers/special dividends that cause you tax planning nightmares. Just buy it and forget it type stuff those are great to have later on. Good luck to you and your wife!

        • It is to the point where my reinvested dividends are the largest investments I have made to VYM on one transaction. Just pile the dividend back in for now.

          • Started investing in 1983 – buying DIS, HSY and WMT (things I understood – my family loved ABC Disney Sunday’s, lived 10 minutes from Hershey Park doing security for concerts and worked part time at Walmart – received a discount for buying stock – I think it was 20%.). Started buying Microsoft in 1987 because I saw all the computers that were being installed at the company I worked for. Started full time dividend investing in 2002 (if I own a company want it to pay me a “check”. Got creamed in 2008 when 40% of my dividend stocks halted their dividends and switched to VIG and VYM. Then added VPU, VCR, VHT, VGT). 2010 started investing in VWITX and VWLTX because of my tax bracket and it made sense since I moved to a no income tax so all the income received was tax free. Passive income is now $18,906 per month with 35% of that is tax free. I take the tax free income from VWITX (which more then covers my expenses per month are less than $27500 a month) and reinvest my equity income and VWLTX. My plan was called Income Replacement (all expenses paid by dividend income). The best way to do that is not to try to hit a home run and just grind out singles with reliable investments. I recommend; VIG, VYM, VPU – slow, steady, bedrock dividend payers.

  2. A fun video might be VYM versus SCHD, lots of nuances and variation in holdings, yields, ratios, and many people might be weighing these two lower fee, broad based, dividend etfs. Schwab v. Vanguard –like Hulk Hogan v. Andre the Giant ..Dividend ETF Wrestlemania!!

Leave a Reply

Your email address will not be published. Required fields are marked *