VYMI
Vanguard International High Dividend Yield ETF
VYMI tracks the FTSE All-World ex US High Dividend Yield Index, providing exposure to high-dividend-paying stocks in developed and emerging markets outside the United States. With over 900 holdings across 40+ countries, it offers global diversification while focusing on income generation. The fund screens for companies with sustainable dividends and excludes REITs. VYMI provides access to international dividend aristocrats and established companies with strong cash flows, offering higher yields than US-focused dividend ETFs while adding currency diversification.
VYM
Vanguard High Dividend Yield ETF
VYM tracks the FTSE High Dividend Yield Index, comprising US companies that are forecasted to have above-average dividend yields. With over 450 holdings across all market caps, it provides broad exposure to dividend-paying US stocks while maintaining a value tilt. VYM excludes REITs and focuses on companies with sustainable dividend policies. As one of the largest dividend ETFs with over $50 billion in assets, VYM offers low-cost, tax-efficient exposure to US dividend stocks, making it a core holding for income-focused investors seeking domestic exposure.
Key Metrics Comparison
| Metric | VYMI (International) | VYM (US) | Winner |
|---|---|---|---|
| Expense Ratio | 0.22% | 0.06% | VYM (-0.16%) |
| Dividend Yield (TTM) | 4.8% | 3.2% | VYMI (+1.6%) |
| 5-Year Annual Return | 8.5% | 10.2% | VYM (+1.7%) |
| Number of Holdings | 900+ | 450+ | VYMI (More diversified) |
| Countries Covered | 40+ | 1 (USA) | VYMI (Global exposure) |
| Assets Under Management | $6.2B | $54B | VYM (More established) |
| P/E Ratio | 12.5 | 17.8 | VYMI (Better valuation) |
| Price/Book Ratio | 1.4 | 2.8 | VYMI (Better valuation) |
| 5-Year Volatility | 16.5% | 15.2% | VYM (Less volatile) |
| Maximum Drawdown (2022) | -18% | -15% | VYM (Better protection) |
| Top 10 Concentration | 15.2% | 25.8% | VYMI (Better diversified) |
| Turnover Rate | 8% | 12% | VYMI (Lower turnover) |
| Dividend Growth (5-Yr) | 4.2% | 6.8% | VYM (Faster growth) |
Performance Comparison
VYMI Performance Profile
International dividend stocks offer higher yields but with currency risk. Strong performance during periods of US dollar weakness and international market outperformance. Lower valuations provide margin of safety and potential for multiple expansion. Higher dividend yield compensates for currency and political risks. Historically performs well when international markets lead US markets. More defensive during US-specific economic downturns. Provides natural hedge against US inflation through currency diversification. Captures dividend growth in faster-growing international markets.
VYM Performance Profile
US dividend stocks offer lower yields but stronger total returns and dividend growth. Superior long-term performance driven by US market leadership and strong corporate earnings. Lower volatility due to single-country focus and established US companies. Stronger dividend growth supports long-term income increases. Tends to outperform during US economic expansions and dollar strength. More familiar regulatory environment and corporate governance. Higher concentration in top holdings but with established blue-chip companies. Better for investors prioritizing dividend growth over current yield.
Strategy & Regional Analysis
VYMI: Global Dividend Strategy
International high dividend exposure:
- Tracks FTSE All-World ex US High Dividend Yield Index
- 900+ holdings across 40+ countries
- Developed Markets: 75% (Europe, Japan, Canada, Australia)
- Emerging Markets: 25% (China, Taiwan, Brazil, India)
- Screens for sustainable dividends (excludes REITs)
- Currency exposure: Multiple currencies vs USD
- Higher yield due to international valuations
- Natural hedge against US dollar strength
- Access to international dividend aristocrats
- Political and regulatory diversification
VYM: US Dividend Strategy
US high dividend yield focus:
- Tracks FTSE High Dividend Yield Index (US only)
- 450+ holdings across all US market caps
- Large-Cap: 70% (established dividend payers)
- Mid-Cap: 20% (growing dividend companies)
- Small-Cap: 10% (higher yield opportunities)
- Value tilt: Overweight financials, energy, utilities
- Excludes REITs for tax efficiency
- Lower yield but faster dividend growth
- Familiar US regulatory environment
- Strong historical dividend growth record
Geographic & Regional Analysis
Fundamental differences in geographic coverage and regional exposure:
VYMI Geographic Distribution
VYM Geographic Distribution
Investment Implications
VYMI Benefits: Global diversification, currency hedge, higher yields
VYM Benefits: Lower costs, faster dividend growth, familiar markets
VYMI Risks: Currency risk, political risk, lower liquidity
VYM Risks: US concentration, dollar strength risk
Combined Approach: VYM for core (70%), VYMI for diversification (30%)
Currency Cycle: VYMI better when USD weakens, VYM better when USD strengthens
Holdings & Sector Analysis
VYMI Top Holdings (International)
Note: Diversified across 40+ countries with lower concentration
VYM Top Holdings (US)
Note: Concentrated in US blue-chip dividend payers
VYMI Sector Allocation
VYM Sector Allocation
Sector Comparison Insights
Currency & Tax Analysis
VYMI Currency Considerations
Currency Risk: Exchange rate fluctuations can enhance or reduce returns. Hedge Benefit: Natural hedge against US dollar weakness. Tax Complexity: Foreign tax credits available but more complex.
VYM Tax Efficiency
Tax Advantage: Simpler tax reporting, all dividends typically qualified. Currency Benefit: No currency risk for USD-based investors. Cost Advantage: Lower expense ratio reduces tax drag.
Yield vs Total Return Trade-off Analysis
Yield Difference: VYMI yields 1.6% more annually than VYM
Return Difference: VYM returned 1.7% more annually over 5 years
Currency Impact: VYMI returns boosted by ~1% annually with USD weakness
On $100,000 over 5 years (7% base return):
• VYM: ~$163,862 (after 0.06% fees, 10.2% total return)
• VYMI: ~$150,366 (after 0.22% fees, 8.5% total return)
• Yield Advantage: VYMI pays ~$8,000 more in dividends over 5 years
Tax Considerations: VYMI's foreign tax credit can offset ~15% of foreign taxes
Currency Adjusted: If USD weakens 2% annually, VYMI matches VYM returns
Note: Past performance doesn't guarantee future results. Currency movements significantly impact international returns.
Risk Analysis
VYMI Risk Profile
Key Risk Factors: Currency risk, political risk, emerging market risk, liquidity risk. Diversification Benefit: Geographic diversification reduces single-country risk.
VYM Risk Profile
Key Risk Factors: US concentration risk, interest rate sensitivity, sector concentration. Performance Advantage: Higher risk-adjusted returns (Sharpe ratio).
International Diversification Analysis
VYMI's International Advantage
Geographic Diversification: Exposure to 40+ countries reduces single-country risk
Currency Diversification: Natural hedge against US dollar strength
Valuation Advantage: International markets trade at significant discounts
Dividend Culture: Many international markets prioritize dividends
Economic Cycle Diversification: Different countries at different economic stages
Political Diversification: Spread across multiple political systems
Sector Diversification: Access to sectors underrepresented in US
Yield Premium: Historically higher yields in international markets
VYM's US Focus Advantage
Familiar Markets: Understandable regulatory environment
Strong Corporate Governance: Established shareholder protections
Dividend Growth: US companies consistently grow dividends
Currency Simplicity: No currency conversion or hedging needed
Liquidity Advantage: Higher trading volumes, tighter spreads
Tax Simplicity: No foreign tax credits to manage
Home Bias Benefit: Avoid behavioral biases against foreign markets
Performance Leadership: US markets have outperformed long-term
Historical Performance Context
2010-2020 (US Outperformance): VYM outperformed due to US market leadership
2000-2010 (International Outperformance): VYMI would have outperformed
Currency Cycles: International outperforms during USD weakness cycles
Valuation Cycles: International markets at historic discounts vs US
Future Outlook: Mean reversion could favor international stocks
Strategic Consideration: VYMI provides built-in currency and geographic diversification
Investor Use Cases & Scenarios
When VYMI Excels
Global Diversification: Want international exposure in dividend portfolio
Currency Hedge: Concerned about US dollar strength
Higher Yield Seekers: Prioritize current income over growth
Valuation Investors: Believe international stocks are undervalued
Portfolio Completion: Already have US exposure, need international
Retirement Income: Need higher yield for income needs
Market Cycle: During international market outperformance
Long-Term Horizon: Can tolerate currency volatility for diversification
When VYM Excels
US-Focused Investors: Prefer domestic companies only
Dividend Growth: Want growing income over time
Cost-Conscious: Want ultra-low expense ratio (0.06%)
Tax Simplicity: Prefer simple tax reporting
Core US Holding: As foundation for US equity exposure
Risk-Averse: Prefer lower volatility and familiar markets
Currency Conservative: Want to avoid currency risk
Performance Priority: Prioritize total returns over current yield
Investment Recommendation
🌍 Choose VYMI If:
- You want international diversification in your dividend portfolio
- Higher current yield is your top priority (4.8%)
- You believe international stocks are undervalued
- You want a hedge against US dollar strength
- You're comfortable with currency risk
- You have a long investment horizon (10+ years)
- You want geographic diversification beyond the US
- You believe international markets will outperform US
🇺🇸 Choose VYM If:
- You want US-only dividend exposure
- Ultra-low cost is important to you (0.06%)
- You prefer simple tax reporting
- You want to avoid currency risk
- Dividend growth is more important than current yield
- You believe US markets will continue leading
- You want familiar companies and regulatory environment
- You prefer lower volatility and drawdowns
💡 Portfolio Construction Strategy
For income-focused investors: VYMI for higher yield with international diversification. For growth-focused investors: VYM for dividend growth and US exposure. For balanced approach: 70% VYM + 30% VYMI combines US core with international diversification. For retirement income: Higher allocation to VYMI for current income needs. For younger investors: Higher allocation to VYM for dividend growth. For taxable accounts: VYM offers simpler tax treatment. For tax-advantaged accounts: VYMI's foreign tax credits are less relevant. For currency view: Overweight VYMI if expecting USD weakness. For valuation view: Overweight VYMI given international discounts.