Any time a broad index like this S&P 500 Index An 18% increase in just over a year is considered good growth. That’s been the case for the S&P 500 since the start of 2025, rebounding after a tumultuous year.
While the S&P 500’s performance bodes well for U.S. stocks, a Vanguard ETF is brewing abroad that could far outperform the market. this Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) That’s a 41% increase since the beginning of 2025 (as of January 30).
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As the name suggests, VYMI focuses on international companies that pay above-average dividends. To be included, a company must meet yield criteria and demonstrate it can maintain its dividend. VYMI currently contains over 1,500 stocks, divided by region as follows:
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Europe: 44%
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Pacific Ocean: 25.9%
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Emerging markets: 20.9%
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North America: 8.2%
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middle East: 0.8%
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other: 0.2%
Including companies from both developed and emerging markets gives investors the best of both worlds. You get the (relative) stability of developed market companies, along with the high growth opportunities that typically come with investing in emerging market companies.
Because these companies pay dividends, they are more likely to have stable financials and a solid industry. Its top five stock holdings over the long term are Roche, HSBC, Novartis, nestleand royal bank of canada. These are long-established companies with a history of being shareholder-friendly.
VYMI’s current dividend yield is about 3.4%, but the average yield since the start of 2025 is about 4.1%. Both are more than three times the S&P 500. The yield will fluctuate with VYMI’s share price, but if we assume it maintains a 4% yield (below the five-year average), it would pay out $40 per year for every $1,000 invested.
Investing in international ETFs is a great way to develop a truly diversified portfolio. It’s important to invest in companies across industries and sizes, but it’s also important to invest in companies from different geographies. I would keep most of my investments in U.S. stocks (about 90%) due to the long track record, but if the U.S. stock market experiences a slowdown, owning international companies can help cushion the blow, which is a good thing.
In the case of VYMI, even if (or rather when) VYMI loses steam, it can still be a good source of income for your portfolio.
