VYM's "High Dividend Yield" Is About 2.2% and Barely Growing

"High Dividend Yield" is in the fund's name, and the name does most of the selling. For a retirement investor looking for the part of the portfolio that produces spendable income — the income sleeve — Vanguard High Dividend Yield ETF (VYM) arrives pre-qualified. So it is worth reading the receipt before assuming the job is done. The cash this fund actually distributed over the past year came to about $3.63 a share, which on a share price near $164 is a trailing yield of roughly 2.2%.

Against a 10-year Treasury that pays about 4.8%, VYM's dividend is less than half of what the market is currently paying for risk-free money. And the stream is not merely thin; it has essentially stopped growing. The fund's annual distribution totaled about $3.25 a share in 2022, $3.48 in 2023, $3.50 in 2024 and $3.50 in 2025 — functionally unchanged for three years. That gap between the name and the delivered income is the piece of this fund most retirement investors never price in.

The stream has stopped growing

This is not a one-year quirk. VYM's per-share distribution grew roughly 7% a year from $2.15 in 2015 to $2.84 in 2019, then slowed. From 2022 through 2025 it compounded at under 3% a year, and from 2023 to 2025 the whole gain was about 0.7%. For a fund whose stated job is income, twelve months of distributions is the honest denominator: a distribution that does not grow loses purchasing power every single year, and this one has spent three years compounding at about zero.

Yield quotes wander with their basis, which is worth knowing if you check the product page yourself: count only the cash actually distributed over the past year — $3.63 a share — and divide by today's price, and you land near 2.2%. Just over a year ago, Morningstar's trailing reading was 2.86%. The difference is not a dividend cut; it is arithmetic. The share price has outrun the quarterly payments. VYM has returned about 18% over the past year and trades within a few percent of its 52-week high, so the return that arrives in the account statement is price appreciation, not dividend income. That distinction matters because a retiree does not spend price appreciation without selling shares.

The construction sells what the name promises

The modest yield is not an accident of a particular year; it is built into the index the fund tracks. VYM tracks the FTSE High Dividend Yield Index, which starts from the large- and mid-cap U.S. stocks in the broader FTSE equity universe, drops real estate investment trusts, and ranks what remains by expected dividend yield. It then takes roughly the top half of that ranking, with screens meant to keep out yield traps, and weights the survivors by market value rather than by how much they yield.

The consequence of market-value weighting is that the fund ends up a large-cap value portfolio with a dividend tilt, and its biggest positions are chosen by size, not by payout. Broadcom is the largest holding at roughly 7% of assets, ahead of JPMorgan Chase and ExxonMobil. The very high-yield names that could push a "high dividend yield" product higher are filtered out by the screens and the REIT exclusion, while the mega-caps set the fund's yield near 2%. On the same screen, Schwab's large-cap dividend fund SCHD pays about 3.0% today, which puts VYM at the low end of its own category. The expense ratio, at 0.06%, and a portfolio of about 450 stocks are the compensating virtues.

Then why does anyone own it?

VYM is not a broken fund, and this is not an indictment of holding it. A cap-weighted approach refuses to double down on falling stocks the way a pure yield-weighting scheme does, the fee is negligible, and as a low-cost large-cap value holding the fund has a legitimate portfolio job. The problem is the job it is assigned, not the fund itself. Retail investors do not buy VYM for large-cap value exposure; they buy it because a product called "High Dividend Yield" is expected to carry the retirement income.

Put a number on that mismatch. A $200,000 position in VYM produces about $4,400 a year in dividends at today's yield. The same dollars in a 10-year Treasury at roughly 4.8% produce about $9,600. The comparison is diagnostic, not a recommendation to swap equities for bonds — a coupon does not grow and carries none of the upside an equity fund does. But it measures what the income actually is: today's VYM dividend is the most expensive way to buy a smaller income that is not growing.

The logical next question is why the income stopped growing. The answer is in the construction. Market-value weighting hands the biggest weights to blue-chip payers whose own dividend increases have slowed, and the same screens that protect VYM from distressed yielders also stop it from loading up on the few pockets of genuinely high, growing payouts. Nothing in the current data suggests the payouts in VYM are in danger; that was never the issue. The issue is the size and the slope of them.

Name the sleeve for what it produces. If the portfolio's job for VYM is a cheap, cap-weighted, large-cap value position, the evidence supports it and the modest distribution is a bonus. If the job is keeping a retirement afloat with income, the trailing yield of about 2.2% and a distribution that moved from $3.48 to $3.50 over two years fail the test on both the amount and the growth. The name on the fund says high dividend yield; the receipt says its income role is the one thing it no longer is.