Want to Generate Thousands of Dollars in Passive Income? This ETF Could Be Your Ticket
The Vanguard High Dividend Yield ETF is a reliable income play.
Overview
The Vanguard High Dividend Yield ETF (NYSEMKT: VYM) is a popular exchange-traded fund for income-oriented investors. It passively tracks the FTSE High Dividend Yield Index, which includes over 600 U.S. dividend-paying stocks with above-average yields, and charges a low expense ratio of 0.04%. It had a 30-day SEC yield of 2.22% at the end of July.
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VYM's underlying index ranks dividend-paying U.S. companies by their expected yield for the next 12 months. It then chooses the top-yielding half and weights them by market capitalization. It also intentionally excludes real estate investment trusts (REITs), which generally pay high yields but don't qualify for lower tax rates. That process of elimination causes VYM to gravitate toward stable, mature sectors -- including financials, industrial, healthcare, consumer staples, and energy -- while giving it less exposure to the tech sector than the major market indexes.
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Source
Originally published at www.fool.com.
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