The Vanguard High Dividend Yield ETF offers a straightforward portfolio of dividend-paying stocks, but it does not currently compete with long-term Treasuries on immediate income.
Vanguard reported a 30-day SEC yield of 2.35% for VYM as of September 30, 2026. The fund charges 0.04% a year and tracks a large-cap value strategy. A 10-year Treasury yield around 5% would therefore pay roughly twice as much current income before taxes.
That gap changes the reason to own VYM. The fund's case rests on two outcomes bonds cannot provide in the same way: rising corporate dividends and equity-price appreciation. Vanguard's data showed a 10-year annualized return of 11.28% through September, but that historical return includes a strong period for U.S. stocks and cannot be projected forward.
VYM's distribution is also variable. The fund passes through dividends from hundreds of holdings, so quarterly payments rise and fall with portfolio composition and company payouts. It does not manufacture extra yield through option premiums or return of capital. That keeps the structure simple, but it also means there is no fixed payment schedule comparable with a Treasury coupon.
Portfolio concentration deserves attention. The source said the 10 largest positions represented about 26% of assets, with Broadcom the largest holding despite a low dividend yield. A large position can contribute more to total return than to income and can expose the fund to sector-specific volatility.
The choice is therefore not merely 2.35% versus a higher bond yield. A Treasury held to maturity offers known cash flows and principal repayment, subject to inflation and reinvestment risk. VYM offers lower current income, uncertain principal value and the possibility that earnings and dividends grow over time.
For investors who need maximum dependable income now, Treasuries have the cleaner case at current yields. VYM is more appropriate when the goal includes long-term growth and the investor can tolerate stock-market losses. Its equity upside must compensate for the income shortfall and additional volatility.