Income-Oriented ETFs: VYM Offers Greater Diversification, While HDV Boasts a Higher Yield
Key Points
VYM charges a lower expense ratio and holds a much broader basket of stocks than HDV
HDV currently offers a higher dividend yield and tilts more heavily toward energy and consumer defensive companies
Both funds showed similar drawdowns over five years, but VYM delivered stronger total returns over the past year
- 10 stocks we like better than iShares Trust - iShares Core High Dividend ETF ›
Vanguard High Dividend Yield ETF (NYSEMKT:VYM) keeps costs lower and offers greater diversification, while iShares Core High Dividend ETF (NYSEMKT:HDV) pays a higher dividend yield and concentrates more on energy and defensive sectors.
Both VYM and HDV focus on U.S. companies with above-average dividend yields, but they differ in portfolio composition, costs, and sector exposure. This comparison highlights which fund may appeal more, depending on whether a higher yield or broader diversification is the priority.
Snapshot (cost & size)
| Metric | VYM | HDV |
|---|---|---|
| Issuer | Vanguard | IShares |
| Expense ratio | 0.04% | 0.08% |
| 1-yr return (as of 2026-03-11) | 17.5% | 13.8% |
| Dividend yield | 2.3% | 2.9% |
| Beta | 0.79 | 0.64 |
| AUM | $73.7 billion | $13.3 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.
VYM is more affordable on fees, charging 0.04% compared to HDV’s 0.08%, while HDV pays a higher dividend yield at 2.9% versus VYM’s 2.3%, which may appeal to income-focused investors.
Performance & Risk Comparison
| Metric | VYM | HDV |
|---|---|---|
| Max drawdown (5 y) | -15.83% | -15.41% |
| Growth of $1,000 over 5 years | $1,487 | $1,423 |
What's Inside
HDV holds 74 stocks, focusing on consumer defensive (28%), energy (26%), and healthcare (17%) companies. Its biggest positions are in Exxon Mobil Corp (NYSE:XOM), Chevron Corp (NYSE:CVX), and Johnson & Johnson (NYSE:JNJ). With a 15-year track record, HDV’s concentrated approach and sector tilts may appeal to those seeking higher income and more defensive exposure.
In contrast, VYM spreads across 589 holdings, with the largest allocations to financial services, technology, and healthcare. Top positions include Broadcom Inc (NASDAQ:AVGO), JPMorgan Chase & Co (NYSE:JPM), and Exxon Mobil Corp, reflecting a broader and more diversified approach than HDV.
For more guidance on ETF investing, check out the full guide at this link.
What This Means for Investors
For investors seeking to generate dividend income from their portfolio, the Vanguard High Dividend Yield ETF (VYM) and iShares Core High Dividend ETF (HDV) are two exchange-traded funds (ETFs) worth considering. Here are a few key takeaways for investors.
Both funds have long track records, stretching back over 15 years. Although, VYM has existed longer, having been founded in 2006. During the time that both funds were in operation, VYM has generated a greater total return of 437%, equating to a compound annual growth rate (CAGR) of 11.9%. HDV, meanwhile, has posted a total return of 350% over the same period, with a CAGR of 10.6%. Both funds trail the S&P 500, which boasts a CAGR of 13.7% during this same time period.
Turning to holdings, VYM has quite a bit more, with nearly 600 stocks. HDV, on the other hand, is more concentrated in just 74 stocks.
As for fees, both funds are affordable. However, VYM has the lower expense ratio (0.04% vs. 0.08%).
Finally, for investors where yield is paramount, HDV wins the head-to-head matchup. It sports a 2.9% dividend yield, while VYM has a current dividend yield of 2.3%.
In summary, both funds are appealing for income-seeking investors. They provide ample diversification, solid income, and charge low fees.
Should you buy stock in iShares Trust - iShares Core High Dividend ETF right now?
Before you buy stock in iShares Trust - iShares Core High Dividend ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and iShares Trust - iShares Core High Dividend ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $511,735!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,140,464!*
Now, it’s worth noting Stock Advisor’s total average return is 946% — a market-crushing outperformance compared to 191% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of March 12, 2026.
JPMorgan Chase is an advertising partner of Motley Fool Money. Jake Lerch has positions in ExxonMobil. The Motley Fool has positions in and recommends Chevron, JPMorgan Chase, and Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom and Johnson & Johnson. The Motley Fool has a disclosure policy.
Recommended Articles
