Do Vanguard ETFs Pay Dividends? (2024)

Many Vanguard exchange-traded funds (ETFs) pay dividends on a regular basis, typically monthly or quarterly. Vanguard ETFs specialize in one specific area within stocks or the fixed-income realm.

The investments in stocks or bonds that the funds make typically pay dividends or interest, which Vanguard distributes back to its shareholders in the form of dividends to meet its investment company tax status.

Vanguard offers many different ETFs that specialize in specific sector stocks, stocks of a certain market capitalization, foreign stocks, and government and corporate bonds of different durations and levels of risk. The majority of Vanguard ETFs are rated three or four stars by Morningstar, Inc., with some funds having two or five stars.

Key Takeaways

  • Vanguard is a large investment advisor offering mutual funds and ETFs, many of which pay dividends.
  • Most of Vanguard's ETF products pay monthly or quarterly dividends.
  • Expense ratios are the fees investors pay for investing in a fund; the lower the better.
  • Vanguard ETFs are noted in the industry for their lower-than-average expense ratios.

Understanding Vanguard ETF Dividends

Vanguard ETF Expense Ratios

One of the more unique features of Vanguard funds, in general, is they are known in the fund industry for expense ratios that are lower than average. As of Jan. 2024, Vanguard ETFs' expense ratios range between 0.03% and 0.22%, while the average expense ratio as of Dec. 2021 (latest information) is about 0.06% for a typical Vanguard ETF, compared to an industry average of 0.24%.

The most expensive Vanguard ETFs tend to be those that invest overseas or have high turnover ratios and specialize in very narrow market niches. The least expensive Vanguard ETFs tend to be those that specialize in corporate or Treasury bonds.

Note

Many investment advisors offer funds with 0% expense ratios.

Vanguard ETF Dividend Yields

ETFs are typically judged on their dividend distributions based on a 30-day SEC yield, which is a standardized yield developed by the Securities and Exchange Commission (SEC) for the fair comparison of funds. The 30-day SEC yield is calculated based on the last 30-day period and reflects investment income earned by a fund after deducting its expenses.

Vanguard ETFs pay dividends either monthly or quarterly. The 30-day SEC yields for Vanguard ETFs range between 0.45% and 6.71% as of Dec. 31, 2023.

What Is an Expense Ratio?

An expense ratio is a percentage that an investment advisor charges investors for administrative and operating expenses. Expense ratios reduce investors' returns, so it's always a good idea to look for funds with low expense ratios. Generally, passively managed funds will have lower expense ratios than actively managed funds.

Is a Mutual Fund Better or an Exchange-Traded Fund (ETF)?

Whether a mutual fund or an exchange-traded fund (ETF) is better will depend on the investor and their goals. ETFs have significantly gained in popularity due to the ease of buying and selling them like stocks through online brokerage accounts. Many of them also come with low expense ratios.

How Do Fund Dividends Work?

Investors in mutual funds or ETFs do not actually own the shares of the companies that the funds invest in; they only own a portion of the fund. However, any shares that pay dividends, those dividends are then passed onto the investor of the mutual fund or ETF directly into their account.

Which ETF Pays the Highest Dividend?

According to VettaFi, the Simplify Tail Risk Strategy ETF pays the highest dividend. It has a dividend yield of 234.58%. The next highest is YieldMax TSLA Option Income Strategy ETF, which pays out a dividend yield of 94.44%; much smaller in comparison to the Simplify ETF. Other managers who offer high-yielding dividend funds include GraniteShares, CICC, and Tidal Investments.

The Bottom Line

Vanguard is a large investment advisor offering a variety of investment funds. Many of these have low expense ratios, providing affordable investment options for investors. Of the stocks in the funds that pay dividends, Vanguard pays out those dividends to holders of the funds. Investors can use dividend-yielding funds to complement their portfolios in order to generate an income stream, which is particularly beneficial for risk-averse investors or those nearing or in retirement.

Do Vanguard ETFs Pay Dividends? (2024)

FAQs

Do Vanguard ETFs Pay Dividends? ›

Just like mutual funds, ETFs distribute capital gains (usually in December each year) and dividends (monthly or quarterly, depending on the ETF).

Does Vanguard S&P 500 ETF pay dividends? ›

Dividend Summary

There are typically 4 dividends per year (excluding specials), and the dividend cover is approximately 1.0.

How do Vanguard ETF dividends work? ›

An ETF is essentially a diversified set of securities and as such, acts as a microcosm of a whole portfolio of investments. In the same way you may receive income (known as dividends) from individual investments within a portfolio, an ETF receives income from the companies or securities it holds.

Does Vanguard ETF reinvest dividends? ›

This no-fee, no-commission reinvestment program allows you to reinvest dividend and/or capital gains distributions from any or all eligible stocks, closed-end mutual funds, exchange-traded funds (ETFs), FundAccess® funds, or Vanguard mutual funds in your Vanguard Brokerage Account or Vanguard Cash Plus Account, as ...

What is the best Vanguard dividend ETF? ›

The 10-year winner

Still, the Vanguard Dividend Appreciation ETF has outpaced its peers by a wide margin after gaining 170% in the past decade. That's as compared to the worst-performing dividend ETF, the Vanguard International High Dividend Yield fund, with its 85% return in 10 years .

How do I know if my ETF pays dividends? ›

The ETF's prospectus will specify which months it pays dividends. You can also look up a fund's dividend history on various financial websites. For specific, upcoming dividend dates, follow the fund's news releases and shareholder communications, which can typically be found on the ETF's website.

Do you get dividends if you invest in an ETF? ›

If you own shares of an exchange-traded fund (ETF), you may receive distributions in the form of dividends. These may be paid monthly or at some other interval, depending on the ETF. It's important to know that not all dividends are treated the same from a tax perspective.

Do S&P 500 ETFs pay dividends? ›

And one of the world's most popular index funds, the Vanguard S&P 500 ETF (VOO), happens to pay a dividend. However, some income-focused investors may prefer to focus on other funds that pay more than the VOO dividend.

How do you receive dividends on Vanguard? ›

Any dividends from income and distributing funds will be paid into your Vanguard account within 10 working days of the fund's payable date. When paid, you can view them by: Log in to your account. Go to the left-hand menu and choose 'Transactions'

What is the downside to reinvesting dividends? ›

Cons. You'll Limit Your Asset Diversification: Reinvesting your dividends in a company you already own shares of can result in an unbalanced portfolio. You Could Still Owe Taxes: It's important to note that dividends are taxed whether you take a cash payout or reinvest them.

Should I add a dividend ETF to my portfolio? ›

Dividend ETFs are better suited for those who want to tap into the stock market's growth, but the value of these ETFs will bear the market's ups and downs. The income from covered-call ETFs is the highest, but the underlying portfolio won't grow by much and the level of income is subject to large swings.

What is the dividend yield for Vanguard Financial ETF? ›

VFH Dividend Yield: 1.88% for June 7, 2024.

Do Vanguard bond ETFs pay dividends? ›

Bond ETF income will come primarily in the form of dividends, but advisors should be aware that bond ETFs can also generate capital gains. Most bond ETFs seek to maintain a specific maturity over time.

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