Which ETF Is Better: HDV Or VYM?

seekingalpha07-29

OwenPrice The stock market has seen an uptick in volatility, as the VIX has risen to some of the highest levels we have seen all year. Higher volatility has resulted in higher fear levels across the ...

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Higher volatility has resulted in higher fear levels across the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4707587-which-etf-better-hdv-or-vym\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4585","symbol_name":"ETF&股票定投概念","start_time":0,"source_url":"https://seekingalpha.com/article/4707587-which-etf-better-hdv-or-vym","article_id":"2455653356","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/181061314/image_181061314.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2455653356","pubTimestamp":1722250800,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"OwenPrice The stock market has seen an uptick in volatility, as the VIX has risen to some of the highest levels we have seen all year. Higher volatility has resulted in higher fear levels across the investing community.   MarketWatch Why has this all taken place?","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4585":"ETF&股票定投概念","FDN":"First Trust Dow Jones Internet I","BK4550":"红杉资本持仓","BK4588":"碎股","HDV":"iShares High Dividend Equity Fun","SCHD":"Schwab US Dividend Equity ETF","VYM":"红利股ETF-Vanguard"},"translate_title":"HDV和VYM哪个ETF更好？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"VYM":1,"FDN":1,"HDV":1,"SCHD":1,"US30Y.BOND":0.9,"US7Y.BOND":0.9,"US6M.BOND":0.9,"US5Y.BOND":0.9,"US3Y.BOND":0.9,"US2Y.BOND":0.9,"US12M.BOND":0.9,"US10Y.BOND":0.9,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6},"content_text":"OwenPrice The stock market has seen an uptick in volatility, as the VIX has risen to some of the highest levels we have seen all year. Higher volatility has resulted in higher fear levels across the investing community.   MarketWatch Why has this all taken place? We have seen an amazing run by stocks, particularly big technology stocks, and some investment managers are merely taking profits. In addition, there have been some cracks starting to show in the economy and the job market. Nothing to be overly concerned about, but cracks, nonetheless. On the horizon, the Federal Reserve is expected to begin its rate cut cycle, which is going to make many of those fixed income rate products less desirable and that will have some investors looking for quality yield opportunities. In today’s piece, we are going to discuss two of the top high-yield dividend ETF options on the market, which are the following:  iShares Core High Dividend ETF (HDV)  Vanguard High Dividend Yield Index Fund ETF (VYM)   ETF Strategy iShares Core High Dividend ETF The fund’s goal is to track the investment results of an index composed of relatively high dividend paying U.S. equities. After all, the ETF is labeled as a “High-Dividend” ETF, so we would expect a decent yield here. There are many other options with much higher yields, but many of them are generated by both owning shares of a company and utilizing options to juice a higher distribution. The two ETFs we are looking at today are both more traditional ETFs with no derivatives happening within them. In order for a stock to be considered by the HDV algorithm, it must possess two things:  Companies must have a wide economic moat High-quality in terms of liquidity on the balance sheet  Once a stock passes those two requirements, they are then selected based on dividend yield, selecting 75 stocks to be considered. Stocks are weighted by the total dollar amount of dividends paid, rather than yield. Vanguard High Dividend Yield ETF The fund’s goal is to track the investment performance of the FTSE High Dividend Yield Index using a full replication approach. The stocks within this ETF tend to be large cap companies. Here are how stocks are selected to potentially be part of the VYM portfolio:  Removing all real estate investment trusts (REITs) Removing all companies which have not paid a dividend in a 12-month period prior to the cut-off or are forecasted to pay a zero dividend over the next 12 months or do not have an available forecasted dividend for the next 12 months. (\"Dividends\" exclude any non-regular or \"special\" distributions.) The remaining stocks are ranked from highest to lowest by 12-month forward dividend yield. The investable market capitalization of each stock is then used to calculate percentiles. An existing index constituent will remain a member of the index until its yield rank falls beyond the 55th percentile. A stock that is not in the index will become a constituent in the index if its yield rank is within the 45th percentile.  As you can see, stocks are ranked by yield when it comes to VYM, but weighting is determined by dividend payment when it comes to HDV, so very different approaches from that standpoint. ETF Performance Here is a look at how both ETFs have performed since the start of 2023.   YCharts Both of these ETFs have outperformed the popular Schwab U.S. Dividend Equity ETF (SCHD) since the start of 2023. Price levels, VYM has increased 14% since the start of 2023 with HDV climbing 9%. In terms of total return, VYM has returned 20% compared to 16% from HDV, which again outperforms SCHD. Now let’s take a look at the total return over the past decade.   YCharts Both of these ETFs have returned well over 100% over the past decade, with VYM returning 153% and HDV returning 118%. However, past results do not indicate future performance, as we know these ETF holdings are constantly changing every year. Dividend Stats iShares Core High Dividend ETF Before we take a look at the top holdings in each portfolio, let's first have a look at the dividend stats. Again, as a reminder, neither of these ETFs utilize derivatives to juice the yields. Here is a look at the dividend stats for HDV:   Seeking Alpha HDV is focused more on consistent dividend payers and higher yields, and less focused on dividend growth. As you can see, the ETF has a five-year dividend growth rate of less than 5% per year. The yield sits around 3.4% right now, which is on the lower end of the spectrum from where the ETF has seen its dividend yield over the past decade. Looking at the chart below, you can see that HDV has had a dividend yield in excess of 4% on a number of occasions over the past decade.   YCharts Vanguard High Dividend Yield ETF VYM also does not necessarily focus on dividend growth, but as you can see below, the ETF has paid a larger dividend for 13 consecutive years and they have a 5-year dividend growth rate around 6%, which is not all that bad.   Seeking Alpha Like HDV, VYM is also trading with a dividend yield that is on the lower end for them over the past decade. Looking at the chart below, you can see that the yield has consistently been north of 3% for much of the past decade.   YCharts Both ETFs pay out their dividends on a quarterly basis. Portfolio Construction Now let’s take a closer look at the portfolio for each ETF to help determine which ETF would fit your portfolio better. We will first look at the sector breakdown and then the top positions. It is key to ensure a particular ETF is not making you too exposed to one particular sector. iShares Core High Dividend ETF First, here is a look at the sector breakdown showing the sectors that HDV is most exposed to:   Seeking Alpha As you can see, Energy, Consumer Staples, Health Care, Utilities, and Communication Services make up the top 5 and account for more than 75% of the entire ETF. Here is a look at the top 10 holdings within HDV:   Seeking Alpha HDV has a total of 81 positions, with Energy and Health Care dominating the top of the portfolio. The top 10 positions account for 58% of the entire portfolio. Vanguard High Dividend Yield ETF Now for VYM, which has a much different approach and top holdings. Both ETFs are focused on yield, but as we saw above, the selection process is a little different, resulting in different top positions. Here is a look at the sector breakdown for VYM:   Seeking Alpha At the top, Financials, Consumer Staples, Technology, Health Care, and Industrials round out the top 5 sectors accounting for more than 70% of the entire ETF. Here is a look at the top 10 holdings:   Seeking Alpha As you can see, a much different portfolio look and the pure position size is much larger at 556 total positions. The top 10 positions account for 25% of the TEF, so much more diversified than HDV. Which ETF Is Better? When it comes to choosing an ETF that is better, it really comes down to what you are looking for. Based on the top sectors, HDV is going to give you not only a higher yield, but more of a defensive approach. On the flip side, VYM does have some more growth potential, but also a lower yield. For being a “High-Yield” ETF, VYM does not offer much in terms of yield given its run up in the ETF share price. However, if you want that defensive approach because you think we could be entering rocky times in the market, HDV could provide a nice jolt for you there, or maybe you just want some higher exposure to their top sectors while taking a diversified approach. Both ETFs are high-quality and offer qualities each in their own right.  Author's Note: Brad Thomas is a Wall Street writer, which means he's not always right with his predictions or recommendations. Since that also applies to his grammar, please excuse any typos you may find. Also, this article is free: written and distributed to assist in research while providing a forum for second-level thinking.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2455653356"}