With market volatility intensifying and uncertainty surrounding President Donald Trump’s tariff policies weighing on investor sentiment, equities are taking a hit. The S&P 500 (SPY) slid more than 3% last week, while the Nasdaq Composite suffered an even steeper decline of nearly 3.5%.
Amid these market swings, investors are increasingly turning to dividend-focused exchange-traded funds (ETFs), which offer broad diversification and consistent payouts, helping to offset losses during market downturns.
While dividends may seem less appealing during bull runs, they become a crucial source of returns when equities face pressure. Among the many options available, Vanguard’s dividend-focused ETFs stand out as a smart choice for investors looking to combine passive income with long-term growth.
Picks for you
Vanguard Dividend Appreciation ETF (VIG)
The Vanguard Dividend Appreciation ETF (NYSEARCA: VIG) is a passively managed fund that seeks to track the investment performance of the S&P U.S. Dividend Growers Index, which consists of common stocks of companies that have a record of increasing dividends over time.
So far this year, VIG has returned 1.51%, and as of press time, it is trading at $198 per share. The fund holds 337 stocks, offering broad diversification across multiple sectors, with a significant allocation to the information technology sector.
Some of the largest holdings include Broadcom Inc. (NASDAQ: AVGO), Apple Inc. (NASDAQ: AAPL), JPMorgan Chase & Co. (NYSE: JPM), Microsoft Corp. (NASDAQ: MSFT), and Visa Inc. (NYSE: V).
Over the past decade, it has delivered an annualized return of 11.56%, while since its inception in 2006, it has provided an average annual return of 9.89%.
While information technology accounts for 24.9% of the portfolio, the fund maintains strong diversification across multiple sectors, with financials making up 22.4% and health care at 14.4%, along with exposure to industrials, consumer staples, and other key industries.
With an expense ratio of just 0.05%, VIG remains one of the lowest-cost dividend ETFs available. An investment of $1,000 would incur only $0.50 in annual fees, making it a cost-effective option for long-term investors seeking dividend growth.
Vanguard International High Dividend Yield ETF (VYMI)
The Vanguard International High Dividend Yield ETF (NYSEARCA: VYMI) offers investors exposure to high-yield dividend stocks outside the U.S., tracking the FTSE All-World ex US High Dividend Yield Index.
The fund focuses on companies in developed and emerging markets that are projected to deliver above-average dividend yields.
Since the start of the year, VYMI has surged over 9%, making it one of the top-performing dividend ETFs. As of press time, the ETF was trading at $74.20, offering a dividend yield of nearly 4.97%, roughly three times that of the S&P 500.
With a diverse portfolio of 1,498 stocks, VYMI offers broad sector and regional exposure, serving as a hedge against U.S. market volatility while maintaining strong income potential.
Some of its largest holdings include pharmaceutical leader Roche Holding AG, auto giant Toyota Motor Corp (NYSE: TM), and Swiss consumer powerhouse Nestlé SA.
Beyond its strong yield, VYMI remains a cost-effective choice with an expense ratio of just 0.17%, where a $1,000 investment incurs only $1.70 in annual fees, making it a cost-effective choice for those seeking global dividend exposure.
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