Generated April 2026 from current fund data.
Overview
VTV and VYM are both Vanguard large-cap equity ETFs that track dividend-focused indexes, but they start from different definitions of what counts as a "value" or "dividend" stock. VTV follows the CRSP US Large Cap Value Index—a pure value tilt based on valuation metrics like price-to-book and earnings yield. VYM targets the FTSE High Dividend Yield Index, which prioritizes companies with above-average dividend-paying history and value characteristics. The result: VYM leans harder into dividend income, while VTV casts a wider value net.
How they differ
The biggest difference is dividend yield: VYM offers 2.25% distribution rate versus VTV's 1.93%—a meaningful 32-basis-point gap for income-focused investors. VYM screens explicitly for dividend payers with a track record; VTV simply buys large-cap stocks that trade cheap relative to earnings and book value, regardless of dividend policy. That screening difference shows up in composition: VYM holds 381 stocks versus VTV's broader holdings within the same large-cap universe.
On fees and size, VTV's 0.03% expense ratio beats VYM's 0.04% by one basis point, and VTV commands $225.7 billion in AUM compared to VYM's $88.7 billion. Both trade at modest valuations themselves—VTV at $202 and VYM at $153—with similar betas around 0.77–0.80, suggesting they'll move in line with the broader market, maybe slightly less volatile.
Who each is best for
- VTV: Value investors who want pure exposure to cheap large-cap stocks without a dividend-screaming overlay; those comfortable in a broader basket and willing to accept lower current yield for potentially wider return potential. Works well in tax-advantaged accounts where the modest 1.93% payout won't be wasted.
- VYM: Income-focused investors prioritizing current cash flow and willing to concentrate in dividend payers; retirees or near-retirees seeking a liquid, tax-efficient income sleeve with a 2.25% starting yield. Also suitable for taxable accounts since dividend stocks tend to generate qualified dividends.
Key risks to know
- Concentration in dividend payers: VYM's explicit screen for high-dividend names means lower exposure to capital-appreciation plays and growth sectors. If the market rotates away from income stocks, VYM could lag VTV.
- Valuation mean reversion: Both funds hold inexpensive stocks. If value underperforms growth for extended periods, both will feel the pain; VTV's wider value mandate spreads this risk slightly more.
- Yield sustainability: VYM's 2.25% distribution assumes dividend policies remain stable. Economic downturns can force dividend cuts, which would reduce future payouts and could depress share price.
- Lower growth exposure: The 0.77–0.80 beta on both suggests they're defensive plays. In strong bull markets, they may trail broader S&P 500 exposure.
Bottom line
If maximizing current income is your goal, VYM's 2.25% yield and dividend-screened approach make it the clearer choice despite slightly higher fees and smaller AUM. If you want pure value exposure with lower fees and are comfortable with a leaner 1.93% payout, VTV offers a cleaner, simpler value index at a bargain expense ratio. Both are low-cost core holdings; the choice hinges on whether dividend income takes priority over pure valuation discipline. Past performance doesn't predict future results.
AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.
