VIG vs VYM: Dividend Growth or High Yield?
Two Vanguard dividend ETFs with opposite philosophies — VIG targets dividend growers (even low-yielding ones), VYM targets high-yielding stocks (with no growth requirement).
VIG = dividend growth focus (10+ year consecutive dividend growth requirement), lower current yield (~1.7%), includes Apple and Microsoft. VYM = high current yield (~3%), broader but no growth screen. VIG has outperformed VYM on total return because dividend growers tend to be higher-quality businesses.
Quick stats
| Metric | VIG | VYM |
|---|---|---|
| Price | $227.46 | $155.11 |
| TTM yield | 1.52% | 2.26% |
| Real yield (NAV-adj.) | 1.92% | 2.96% |
| NAV change (period) | 26.2% | 30.7% |
| Annualized volatility | 1127.6% | 1116.8% |
| Distribution frequency | quarterly | quarterly |
| Expense ratio | 0.05% | 0.06% |
| Inception | 2006-04-21 | 2006-11-10 |
| AUM | ~$85B | ~$60B |
| 1Y dividend CAGR | 5.3% | 0.2% |
| 3Y dividend CAGR | 6.2% | 2.5% |
| 5Y dividend CAGR | 9.2% | 3.8% |
| 5Y price CAGR | 8.3% | 8.5% |
Strategy & holdings
VIG tracks the S&P U.S. Dividend Growers Index, which requires 10+ consecutive years of dividend growth. VYM tracks the FTSE High Dividend Yield Index — above-median yielding US stocks, no growth requirement. Opposite ends of the dividend-investing spectrum.
~330 US stocks with 10+ years of consecutive dividend growth. Includes Microsoft, Apple, Broadcom. Excludes top 25% highest-yielders (anti-yield-trap).
~440 US stocks with above-median yield. Heavy banks, energy, telecom, tobacco. No quality or growth screen.
The critical difference: VIG's 10-year dividend growth screen has two effects. First, it lets high-quality low-yielders like Microsoft (0.8% yield, 17% dividend CAGR) into the fund. Second, VIG explicitly kicks out the top 25% highest-yielders to avoid yield traps. VYM does the opposite — it targets high-yielders without any quality or growth requirement, so it picks up telecom, energy, and financials-heavy exposure. Historical total return favors VIG because dividend growers are structurally higher-quality businesses. Historical income favors VYM because the yield is roughly 2x.
Yield & distributions
VIG yields 1.7-2%, VYM yields 2.8-3%. On dollar terms, a $100k position in VYM produces about $1,000 more income per year than the same in VIG. But VIG's dividend grows roughly 8-10% annually vs VYM's 5-6%, so the gap narrows over time (though VIG never quite catches up at the yield-on-cost level over realistic horizons).
Total return & NAV
VIG has outperformed VYM on total return over most rolling windows — typically by 1-3 percentage points annualized. The outperformance comes from VIG holding higher-quality businesses that compound faster. Over 10Y+ periods the gap is significant and consistent.
Risk & volatility
VIG has had lower drawdowns than VYM in most corrections. VYM's heavier exposure to cyclicals (banks, energy) means bigger swings when those sectors struggle. VIG's quality tilt toward consumer staples, technology, and healthcare produces a smoother ride.
Tax treatment
Both pay qualified dividends at LTCG rates. Tax efficiency is essentially identical.