VYM
Vanguard High Dividend Yield ETF
VYM tracks the FTSE High Dividend Yield Index, selecting U.S. companies with higher-than-average dividend yields. Market-cap weighted with broad diversification across all market caps. Focuses purely on current yield without dividend growth requirements.
FDVV
Fidelity High Dividend Value ETF
FDVV tracks the Fidelity High Dividend Value Index, selecting U.S. companies with sustainable dividend yields and value characteristics. Multi-factor approach combining yield, value, and quality metrics. Concentrated portfolio focused on dividend sustainability.
Key Metrics Comparison
| Metric | VYM | FDVV | Winner |
|---|---|---|---|
| Dividend Yield | 3.18% | 3.65% | FDVV (+0.47%) |
| Expense Ratio | 0.06% | 0.29% | VYM (-0.23%) |
| 5-Year Annual Return | 9.8% | 8.9% | VYM (+0.9%) |
| Number of Holdings | 448 | 102 | VYM (4.4x more) |
| Assets Under Management | $58.3B | $2.1B | VYM |
| 5-Year Dividend Growth | 5.8% | 4.3% | VYM (+1.5%) |
| P/E Ratio | 16.5 | 14.8 | FDVV (cheaper) |
| Beta vs S&P 500 | 0.90 | 0.88 | FDVV (lower risk) |
Performance Comparison
VYM Performance
Higher total returns with slightly lower yield. Broader diversification (448 holdings) reduces concentration risk. Better dividend growth provides inflation protection. Lower expense ratio (0.06%) enhances net returns. More mid/small-cap exposure for growth.
FDVV Performance
Higher current income with slightly lower total returns. Quality screening for sustainable dividends. Lower beta offers better downside protection. Value-focused approach during market downturns. Multi-factor methodology combines yield and value.
Strategy Analysis
VYM Approach
Broad high yield diversification:
- Tracks FTSE High Dividend Yield Index
- Selects companies with above-average yields
- Market-cap weighted methodology
- Includes all market caps (large, mid, small)
- 448 holdings for broad diversification
- No minimum dividend growth requirements
- Lower turnover strategy
- Pure yield focus across entire market
FDVV Approach
Quality high yield with value tilt:
- Tracks Fidelity High Dividend Value Index
- Multi-factor approach (yield + value + quality)
- Screens for sustainable dividends
- Value-focused stock selection
- Concentrated portfolio (102 holdings)
- Quarterly rebalancing
- Quality metrics for dividend safety
- Lower volatility strategy
Index Methodology Differences
VYM's pure yield focus vs FDVV's multi-factor approach creates fundamentally different portfolio constructions.
Primary Focus
Portfolio Size
Weighting Method
Quality Screening
Sector Allocation Comparison
Sector Weighting Differences
FDVV's value focus creates different sector exposures compared to VYM's pure yield approach.
Financials Exposure
Healthcare
Energy
Technology
Yield Characteristics & Sustainability
FDVV's higher yield comes from value concentration, while VYM's broader approach provides more sustainable yield growth.
Yield Composition
FDVV yield sources: Financials, Energy, Utilities
VYM yield sources: Financials, Healthcare, Staples
Yield volatility: FDVV slightly lower
Dividend growth: VYM significantly better
Dividend Sustainability
Average Payout Ratio: VYM 62% vs FDVV 58%
Dividend Coverage: VYM 1.6x vs FDVV 1.7x
Cut Risk: Both low, FDVV slightly lower
Financial Health: FDVV companies stronger
Quality Metrics
ROE: VYM 18% vs FDVV 22%
Debt/Equity: VYM 1.2x vs FDVV 0.9x
Profit Margin: VYM 12% vs FDVV 15%
Quality Score: FDVV higher
Income Analysis
VYM Income Profile
Moderate current yield with better growth. Broader diversification provides income stability. Financials and healthcare heavy for defensive income. Lower expense ratio maximizes net income. Better inflation protection through growth.
FDVV Income Profile
Higher current income with moderate growth. Quality screening for dividend safety. Value-focused during market downturns. Lower beta provides stable income. Multi-factor approach balances yield and quality.
Historical Performance & Backtesting
Long-Term Performance Comparison
VYM has outperformed FDVV over longer periods despite lower yield, thanks to better diversification and lower costs.
Since 2016 (FDVV inception)
Maximum Drawdown (2020)
Sharpe Ratio
Dividend Growth
Top Holdings Comparison
VYM Top Holdings (Market-Cap Weighted)
Note: Market-cap weighted, 448 holdings, financials/healthcare heavy
FDVV Top Holdings (Multi-Factor Weighted)
Note: Multi-factor weighted, 102 holdings, financials/energy heavy
Investment Recommendation
🏦 Choose VYM If:
- Better total returns are priority (9.8% vs 8.9%)
- Ultra-low costs matter (0.06% vs 0.29%)
- Broader diversification is important (448 vs 102)
- Dividend growth is key (5.8% vs 4.3%)
- You want all market cap exposure
- Lower turnover appeals to you
- You prefer passive index approach
- Inflation protection through growth matters
💰 Choose FDVV If:
- Higher current income is priority (3.65% vs 3.18%)
- Dividend sustainability matters most
- Value investing appeals to you
- Lower beta for downside protection (0.88 vs 0.90)
- Quality screening is important
- You prefer multi-factor approach
- Concentrated value portfolio preferred
- Dividend safety over maximum growth
💡 Portfolio Construction Strategy
For cost-conscious investors: VYM provides better long-term value due to 0.23% expense ratio advantage. For income-focused investors: FDVV's 0.47% yield advantage equals VYM's performance gap over ~2 years if markets are flat. For balanced approach: 60% VYM + 40% FDVV provides ~3.37% blended yield with better growth than FDVV alone and lower costs than 100% FDVV. Consider combining with SCHD: 50% SCHD + 30% VYM + 20% FDVV provides balanced yield/growth/quality. Important: FDVV's higher expense ratio (0.29%) vs VYM (0.06%) reduces net returns by ~0.23% annually. During value outperformance cycles, FDVV may shine. During growth periods, VYM likely outperforms. FDVV's quality screening provides better protection during recessions.