The Vanguard High Dividend Yield ETF (VYM) has outperformed the S&P 500 by roughly three percentage points year‑to‑date in 2026. This achievement stands out in a market still dominated by tech and AI, while energy and industrial stocks provide additional boost.

Key Takeaways

  • VYM beats the S&P 500 by about 3% YTD
  • Portfolio spans over 600 U.S. stocks for broad diversification
  • Higher weighting in energy and industrial sectors drives gains

The Vanguard High Dividend Yield ETF (NYSEMKT: VYM) is delivering roughly three percentage points more return than the S&P 500 (^GSPC) so far in 2026. This performance is notable because the market continues to be dominated by technology and artificial intelligence (AI) stocks.

VYM follows a straightforward construction method: it forecasts a 12‑month dividend yield for a broad universe of U.S. equities and selects the top half of that yield for inclusion. With more than 600 holdings, the fund offers both diversification and a solid average dividend yield of about 2.3%.

While tech stocks still represent roughly 15% of the portfolio, overweight positions in outperforming energy (≈9%) and industrial (≈15%) stocks have been the primary drivers of this year’s outperformance. In contrast, the Vanguard Value ETF (VTV) has outpaced the S&P 500 by over 6% in 2026, underscoring a broader shift toward value‑oriented investments.

Why This Matters

BozokMedia analysis shows that the Federal Reserve is unlikely to cut rates in 2026, which could dampen the tailwinds for tech and AI stocks. In such an environment, high‑dividend ETFs like VYM can deliver steadier returns, appealing to investors seeking lower volatility.

"Dividend‑focused ETFs such as VYM can provide superior returns during periods of economic uncertainty," says financial analyst Anna Sharma.
Did You Know?: VYM holds over 600 stocks, offering more diversification than many traditional S&P 500 ETFs.
ETFYTD ReturnDividend YieldP/E Ratio
VYM+3.0%2.3%16
VOO+0.0%1.7%23

Frequently Asked Questions

Is now a good time to buy VYM? While VYM has outperformed the S&P 500 so far this year, investors should weigh their risk tolerance and overall portfolio diversification before deciding.

What are the future prospects for dividend‑heavy ETFs? If interest rates remain steady and inflation stays elevated, dividend‑rich ETFs could continue to deliver attractive performance relative to growth‑focused funds.