- PRICING
- LIVE QUOTES
- LEARN
- HELP
EN
If You Invest $1,000 in the Vanguard High Dividend Yield ETF Right Now and Never Add Another Dollar, Here's What History Says It Could Deliver in 20 Years
Key Points
The Vanguard High Dividend Yield ETF has delivered a 9.3% average annual total return since its inception.
That's a little better than the return of the average dividend stock over the past half-century.
Dividend stocks can be powerful investments. Through compounding, they can grow a relatively modest investment into a much larger future nest egg.
Here's a look at how much a $1,000 investment in the Vanguard High Dividend Yield ETF (NYSEMKT: VYM) could grow in 20 years if you never add another dollar.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
Steadily growing in value
Dividend stocks in the S&P 500 have historically delivered an average annual total return of 9.2% over the last 50 years, according to data from Ned Davis Research and Hartford Funds. That's more than double the return of non-dividend payers (4.2%).
The dividend-focused Vanguard High Dividend Yield ETF has delivered a slightly better performance, producing a 9.32% annualized total return since its inception in 2006. Using that historical return data, here's how much this dividend ETF could grow a $1,000 investment in 20 years:
Data and chart by the author.
As that chart shows, VYM could grow a $1,000 investment to nearly $6,000 in 20 years at its historical rate of return. That's almost a 500% total return during that period.
While past performance is no guarantee of future results, the Vanguard High Yield Dividend ETF is well-positioned to continue delivering strong annual total returns. It invests broadly in companies that pay above-average dividends. It currently holds over 600 stocks across nearly all sectors. That diversification helps reduce risk, while the fund's collective dividend income should compound its value over the long term. It's an excellent core ETF to buy and hold for those seeking a lower-risk way to grow their wealth.
Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.