Which Is the Better Dividend ETF, iShares' HDV or Vanguard's VYM?
Key Points
The iShares Core High Dividend ETF offers a substantially higher dividend yield of 14.5% compared to 2.3% for the Vanguard High Dividend Yield ETF.
The Vanguard High Dividend Yield ETF provides broader diversification with 589 holdings and a lower expense ratio of 0.04%.
The iShares Core High Dividend ETF maintains a more defensive posture with a lower beta and heavy concentration in consumer defensives and energy sectors.
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The iShares Core High Dividend ETF (NYSEMKT:HDV) targets a concentrated group of high-yielding stocks, while the Vanguard High Dividend Yield ETF (NYSEMKT:VYM) offers a broader, lower-cost portfolio of dividend payers.
Both funds serve income-focused investors by tracking indexes of U.S. equities with above-average yields. While they share a common goal of generating cash flow, their selection criteria lead to different sector exposures and yield profiles that may suit different risk tolerances.
Understanding these structural differences is essential for investors choosing between a broad-market yield strategy and a more concentrated income approach.
Snapshot (cost & size)
| Metric | VYM | HDV |
|---|---|---|
| Issuer | Vanguard | iShares |
| Expense ratio | 0.04% | 0.08% |
| 1-yr return (as of April 30, 2026) | 29.60% | 23.20% |
| Dividend yield | 2.37% | 2.92% |
| Beta | 0.77 | 0.45 |
| AUM | $88.8 billion | $13.6 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Vanguard fund is more affordable with a 0.04% expense ratio, which is half the cost of the iShares fund. However, the iShares fund provides a slightly higher payout, with a dividend yield of 2.92% versus 2.37% for the Vanguard fund.
Performance & risk comparison
| Metric | VYM | HDV |
|---|---|---|
| Max drawdown (5 yr) | (15.80%) | (15.40%) |
| Growth of $1,000 over 5 years (total return) | $1,756 | $1,715 |
What's inside
The iShares Core High Dividend ETF was launched in 2011 and currently holds 75 positions, emphasizing stability and higher current income over broad market participation. Its largest positions include Exxon Mobil (NYSE:XOM) at 8.58%, Chevron (NYSE:CVX) at 6.49%, and Johnson & Johnson (NYSE:JNJ) at 5.71%. The portfolio is concentrated in defensive sectors, with 24% in consumer defensives, 22% in energy, and 17% in healthcare. It has paid $3.96 per share over the trailing 12 months.
In contrast, the Vanguard High Dividend Yield ETF, launched in 2006, manages a larger portfolio of 589 holdings, representing a more diversified approach that captures a larger slice of the dividend-paying universe. Its largest positions include Broadcom (NASDAQ:AVGO) at 6.28%, JPMorgan Chase & Co. (NYSE:JPM) at 3.27%, and Exxon Mobil (NYSE:XOM) at 3.15%. Its sector mix leans toward financial services at 20%, technology at 15%, and healthcare at 13%. It has paid $3.51 per share over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Dividends are a great way to collect passive income, and the Vanguard High Dividend Yield ETF (VYM) and iShares Core High Dividend ETF (HDV) make it easy to capture these payouts. They do the legwork of finding equities with robust dividends. Deciding which fund to choose depends on a few key characteristics.
HDV has a narrow focus of only 75 stocks that it screens for financial health. This is an important consideration, since companies must have strong finances to afford dividend payouts. The industries it focuses on are generally very stable and low risk, contributing to HDV’s lower max drawdown and beta. These factors make HDV ideal for conservative investors who want a secure dividend in exchange for a higher cost.
VYM seeks stocks that are forecasted to have above-average dividend yields. It offers a lower expense ratio, helping you keep more income in your pocket. Its much larger set of 589 holdings means broad exposure to dividend stocks, delivering better diversification to your portfolio and serving to offset any downturns in a particular sector. VYM’s much larger AUM also provides greater liquidity for active traders.
However, the fund’s higher slice of tech stocks means more volatility and risk. If you’re comfortable with that, VYM is a solid all-around ETF for long-term dividend income.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Robert Izquierdo has positions in Broadcom, JPMorgan Chase, Johnson & Johnson, and Vanguard High Dividend Yield ETF. The Motley Fool has positions in and recommends Broadcom, Chevron, JPMorgan Chase, and Vanguard High Dividend Yield ETF. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
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