ETFs
2 Top-Rated Vanguard ETFs That Are Must-Buys in July
Investing is like gardening. It takes a little work, patience, and specialized knowledge. However, with a little help, anyone can do it.
One of the best ways to invest, whether you’re a beginner or an expert, is through exchange-traded funds (ETFs). These specialized investment products trade like stocks, but they have many of the same characteristics as mutual funds. The beauty of ETFs is that they make investing in a diversified portfolio of stocks simple and accessible.
Two fantastic options for long-term investors are: Vanguard High Dividend Yield ETF (NYSEMKT: VYM) and the Vanguard S&P 500 Exchange Traded Fund (NYSE: VOO).
Image source: Getty Images.
Vanguard High Dividend Yield ETF
The Vanguard High Dividend Yield ETF has many attractive features and offers investors a solid selection of stocks at a reasonable cost.
The fund follows the FTSE High Dividend Yield Indexwhich includes about 400 dividend-paying value stocks listed on U.S. exchanges. While some of its holdings are headquartered overseas, about 96% are U.S. companies.
In terms of sectors, the financial (21%), technology (14%), healthcare (11%) and consumer (10%) sectors are the most represented. However, the fund also has significant holdings in the energy (8%), utilities (7%) and retail (6%), among others.
Its 5 main titles are:
|
1. JPMorgan Chase |
JPM |
3.5% |
|
2. Broadcom |
AVGO |
3.5% |
|
3. ExxonMobil |
XOM |
3.2% |
|
4. Proctor & Gamble |
PG |
2.3% |
|
5. Johnson & Johnson |
JNJ |
2.1% |
ETFs charge various management fees to their investors. The sum of these fees, known as the expense ratiois the percentage of your investment that you pay each year to cover the fund’s operating expenses. When choosing ETFs, it’s important to consider their expense ratios, as these can have a significant impact on your long-term investment performance.
For example, this Vanguard fund has an expense ratio of 0.06%. This means that for every $10,000 invested in the fund, a person will have to pay $6 in annual fees.
That’s low compared to the average ETF expense ratio: Many have expense ratios closer to 0.4%, which equates to $40 in annual fees on a $10,000 investment. Some specialty ETFs have expense ratios of 1% or more.
In short, this Vanguard fund has one of the lowest expense ratios on the market, making it a smart and cost-effective choice for income-seeking investors.
Vanguard S&P 500 Exchange Traded Fund
Perhaps more than any other fund, the Vanguard S&P 500 ETF is the one buy-and-hold investors need to know about.
The fund follows the S&P 500 index, which is one of the most widely followed indices. Since the S&P 500 is comprised of 500 of the largest publicly traded U.S. companies, it provides a reasonable benchmark for the overall performance of the U.S. stock market.
The story continues
The fund’s top holdings are therefore what one might expect. Given that technology stocks dominate the list of most valuable companies today, over 40% of its holdings come from the technology sector. However, the fund also has significant holdings in the financial (12%), healthcare (9%) and retail (8%) sectors. The top 5 holdings are:
|
1. Microsoft |
MSFT |
7% |
|
2. Apple |
AAPL |
6.3% |
|
3. Nvidia |
NVDA |
6.1% |
|
4. Alphabet |
GOOG, GOOGL |
4.3% |
|
5. Amazon |
AMZN |
3.6% |
What sets this fund apart, and what long-term investors should appreciate, is that its expense ratio is among the lowest available. It’s just 0.03%, meaning investors pay just $3 per year for a $10,000 stake.
In short, this Vanguard fund offers exposure to Wall Street’s most valuable companies, and investors return only a small portion of their hard-earned profits to the fund’s managers. Over the long term, this fund offers investors, new and old, a smart and easy way to invest for the future—and it’s a winning strategy.
Should You Invest $1,000 in Vanguard Whitehall Funds – Vanguard High Dividend Yield ETF Right Now?
Before purchasing shares of Vanguard Whitehall Funds – Vanguard High Dividend Yield ETF, consider the following:
The Motley Fool Stock Advisor analyst team has just identified what they believe to be the 10 best stocks Investors should buy now…and Vanguard Whitehall Funds – Vanguard High Dividend Yield ETF wasn’t one of them. The 10 stocks selected could generate monstrous returns in the years to come.
Consider when Nvidia I made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $771,034!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio construction advice, regular analyst updates, and two new stock picks each month. The Stock Advisor service offers more than quadrupled the return of the S&P 500 since 2002*.
*Stock Advisor returns as of July 2, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Alphabet, Amazon, ExxonMobil, Nvidia, and Procter & Gamble. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, JPMorgan Chase, Microsoft, Nvidia, Vanguard S&P 500 ETF, and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom and Johnson & Johnson and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a position in Alphabet, Amazon, Apple, JPMorgan Chase, Microsoft, Nvidia, Vanguard S&P 500 ETF, and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom and Johnson & Johnson and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. disclosure policy.
2 Top-Rated Vanguard ETFs That Are Must-Buys in July was originally published by The Motley Fool