The 3 Vanguard ETFs With The Highest Dividend Yields

Vanguard is a favorite for many investors, thanks to its wide portfolio of index funds with very low expenses. Many of the company’s exchange-traded funds (ETFs) also pay dividends, which are attractive to retirees. Here’s a look at Vanguard’s top 3 ETFs with the highest dividend yields.

#3 Emerging Markets Government Bond ETF (VWOB)

Offering diversification beyond the U.S., Vanguard’s Emerging Markets Government Bond ETF (VWOB | VWOB Price Prediction) aims to track the performance of the Bloomberg USD Emerging Markets Government RIC Capped Index. The fund is passively managed and uses index sampling. Vanguard says VWOB “maintains a dollar-weighted average maturity consistent with that of the [Bloomberg] index.”

The fund offers a 5.63% SEC yield. The SEC yield calculates a fund’s hypothetical annualized income as a percentage of its assets. As Vanguard explains, “A security’s income, for the purposes of this calculation, is based on the current market yield to maturity (for bonds) or projected dividend yield (for stocks) of the fund’s holdings over a trailing 30-day period. This hypothetical income will differ (at times, significantly) from the fund’s actual experience. As a result, income distributions from the fund may be higher or lower than implied by the SEC yield.”

VWOB had a one-year return of 6.41% and an expense ratio of 0.15%. The fund has $6.13 billion in assets under management.

#2 Long-Term Corporate Bond ETF (VCLT)

The Long-Term Corporate Bond ETF (VCLT) invests primarily in high-quality (investment-grade) corporate bonds. It “seeks to provide a high and sustainable level of current income,” according to the fund managers, by tracking the performance of the Bloomberg U.S. 10+ Year Corporate Bond Index. The majority of the fund is invested in A- or BBB-rated bonds.

VCLT offers a 5.68% 30-day SEC yield, as of Jan. 6. It had a one-year return of 2.86% and a low expense ratio of 0.03%. The fund $8.36 billion in assets.

#1 High-Yield Active ETF (VGHY)

This High-Yield Active ETF (VGHY) is a new offering in the Vanguard family, with a 6.02% 30-day SEC yield. It’s a high-yield corporate fixed income portfolio, focusing on sustainable income. The fund’s benchmark is the Bloomberg U.S. High Yield 2% Issuer Capped Total Return Index. The majority of the fund’s holdings, which are diversified by industry, are BB-rated and lower bonds.

Vanguard notes that VGHY “is a stand alone product and is separate and distinct from the Vanguard High-Yield Corporate Fund (VWEAX and VWEHX). Differences in scale, investment sub-advisors, certain investment processes, and underlying holdings are expected to produce different investment returns by the funds.”

The relatively new fund currently has $145.4 million in assets, with an expense ratio of 0.22%.