VYM vs. FDVV: Which High-Yield Dividend ETF Is the Best Choice for Investors?
Key Points
VYM charges a lower expense ratio and holds far more stocks than FDVV.
FDVV offers a higher dividend yield, but it's experienced greater volatility with a larger tilt toward technology.
VYM has seen a smaller drawdown in the past five years compared to FDVV.
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Both the Fidelity High Dividend ETF (NYSEMKT:FDVV) and the Vanguard High Dividend Yield ETF (NYSEMKT:VYM) aim to deliver above-average income by focusing on companies with strong dividend profiles.
While FDVV introduces sector tilts for yield enhancement, VYM tracks a broad, passively managed index of high-yield stocks, leading to meaningful differences in cost, diversification, and sector exposure.
Snapshot (cost & size)
| Metric | FDVV | VYM |
|---|---|---|
| Issuer | Fidelity | Vanguard |
| Expense ratio | 0.15% | 0.06% |
| 1-yr return (as of Dec. 20, 2025) | 13.43% | 13.14% |
| Dividend yield | 3.02% | 2.42% |
| Beta (5Y monthly) | 0.82 | 0.74 |
| AUM | $7.7 billion | $84.6 billion |
Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.
VYM is more affordable to own, charging a much lower expense ratio. However, FDVV offers a higher dividend payout, which can give it an edge for income-focused investors.
Performance & risk comparison
| Metric | FDVV | VYM |
|---|---|---|
| Max drawdown (5 y) | -20.17% | -15.87% |
| Growth of $1,000 over 5 years | $1,772 | $1,565 |
What's inside
VYM holds 566 stocks and uses a full-replication approach to mirror its underlying high-dividend index. Its largest sector exposures are financial services (making up 21% of total assets), technology (18%), and healthcare (13%), with top positions in Broadcom, JPMorgan Chase, and Exxon Mobil. The fund's broad reach and index-tracking approach provide wide diversification.
FDVV, by contrast, invests in just 107 holdings and leans more heavily on technology (26%), followed by financial services (19%) and consumer defensive (12%). Its top stocks include Nvidia, Apple, and Microsoft, reflecting a pronounced tech tilt that could influence both yield and risk characteristics compared to VYM's broader mix.
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What this means for investors
VYM and FDVV both aim to deliver higher-than-average dividend payments, and between the two, FDVV offers the higher yield. However, its higher expense ratio will eat into those earnings, so that's a factor investors will need to consider.
The primary difference between these two funds lies in diversification. VYM is the more diversified fund, with hundreds more stocks than FDVV, and it's also less heavily weighted toward technology.
Tech stocks can be more lucrative than those from other industries, as seen with FDVV's higher five-year total returns compared to VYM. However, it's also often more volatile, which is reflected in FDVV's steeper drawdown and higher beta.
For those looking for added diversification and stability, VYM's broad mix of stocks can help mitigate risk. While it offers a lower dividend yield, its lower expense ratio could also save you thousands of dollars in fees over time.
FDVV, on the other hand, can be a smart choice for those seeking higher earnings. It has experienced more severe price swings in recent years, but it's also earned higher returns and offers a higher dividend payout. If you're comfortable with slightly more volatility, FDVV could be the more lucrative option.
Glossary
Expense ratio: The annual fee, expressed as a percentage, that a fund charges to manage your investment.
Dividend yield: The annual dividend income expressed as a percentage of the fund's price.
ETF (Exchange-Traded Fund): A fund that trades on stock exchanges and typically tracks an index or sector.
Beta: A measure of a fund's volatility compared to the overall market, usually the S&P 500.
Drawdown: The percentage decline from a fund's peak value to its lowest point over a specific period.
AUM (Assets Under Management): The total market value of assets that a fund manages on behalf of investors.
Full-replication approach: A strategy where a fund holds all securities in its benchmark index in the same proportions.
Sector tilt: An investment strategy that intentionally overweights or underweights certain sectors compared to a benchmark.
Index-tracking: A strategy where a fund aims to replicate the performance of a specific market index.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, JPMorgan Chase, Microsoft, Nvidia, and Vanguard Whitehall Funds - Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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