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Who is Warren Buffett’s favorite fund manager? Almost certainly Vanguard.He has only purchased two exchange traded funds (ETFs). berkshire hathaway‘s portfolio. Vanguard invests more of Berkshire’s money to manage the fund. Buffett also revealed that several years ago he encouraged his family to invest much of their inherited cash in Vanguard. S&P500 index fund.
Income investors have some great options within Vanguard’s fund lineup. In my opinion, three of them particularly stand out. By investing $10,000 in each of these three Vanguard ETFs, he could earn $1,164 in passive income annually.
1. Vanguard High Dividend Yield ETF
of Vanguard High Dividend Yield ETF‘s (NYSEMKT:VYM) The name tells you what you need to know about the fund’s goals. We try to track the performance of. FTSE’s high dividend yield An index that collects stocks with high dividend yields.
The ETF currently holds 450 stocks and has a median market capitalization of nearly $133 billion. These stocks tend to be attractively valued relative to the S&P 500. The average price-to-earnings ratio (P/E) of Vanguard High Dividend Yield’s holdings is 16.7. The top five holdings of the fund are as follows: broadcom, JP Morgan Chase, exxon mobil, johnson & johnsonand procter and gamble.
Pays dividends quarterly. The dividend yield is 3.01%. If he invests $10,000 in the ETF, he will earn $301 per year.
Since its inception in November 2006, Vanguard High Dividend Yield has delivered an average annual total return of 8.24%. As a passively managed fund, the annual expense ratio is low at just 0.06%.
2. Vanguard International High Dividend Yield Index Fund ETF
Keywords to pay attention to are: Vanguard International High Dividend Yield Index Fund ETF (NASDAQ:VYMI) “International”. This Vanguard ETF focuses exclusively on high-dividend stocks based outside the US and aims to track their performance. FTSE All World (excluding US) high dividend yield index.
Vanguard International Fund is more diversified than Vanguard High Dividend Yield and includes 1,329 stocks. The median market capitalization of these stocks is approximately $45 billion. It also offers a more attractive value than the Vanguard High Dividend Yield Portfolio, with an average P/E of 9.6x. The top five ETF holdings are: Toyota, Novartis, shell, Rocheand BHP Group.
This ETF pays a quarterly dividend and currently has a yield of 4.55%. A $10,000 investment earns you $455 per year.
In recent years, the performance of international stocks has not been as impressive as that of U.S. stocks. As a result, since its inception in February 2016, Vanguard International High Dividend Yield’s average annual total return has been 7.92%, which is not as high as the #1 ETF on this list. Another downside to this ETF is its relatively high expense ratio of 0.22% (compared to other Vanguard funds).
3. Vanguard Real Estate Index Fund ETF
Real estate has long been a popular stock for income investors. Vanguard provides an easy way to invest in real estate. Vanguard Real Estate Index Fund ETF (NYSEMKT:VNQ). This fund is MSCI US Investable Market Real Estate 25/50 index.
Vanguard Real Estate holds 159 stocks, primarily real estate investment trusts (REITs), with a median market capitalization of approximately $26 billion. However, many of his REITs are not so-called bargains. The average P/E multiple for ETFs is 35.5x. The fund’s top five holdings are Vanguard Real Estate II Index Fund Institutional Plus Shares Mutual Fund. Prologis, american tower, Equinixand crown castle.
REITs must return at least 90% of their taxable income to shareholders through dividends. As a result, Vanguard Real Estate pays an attractive quarterly dividend with a yield of 4.08%. If he invested $10,000 in the ETF, his annual income would be $408. This brings his total passive income from these three Vanguard ETFs to $1,164.
The main blow to Vanguard Real Estate is performance. This ETF of his has generated an average annual total return of 7.41% since his inception in September 2004. Its annual expense ratio of 0.12% is slightly higher than some Vanguard index funds, but well below the average expense ratio of 1.1% for similar non-Vanguard funds. vanguard family.
Should I invest $1,000 in Vanguard Specialized Funds – Vanguard Real Estate ETF now?
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JPMorgan Chase is an advertising partner of The Motley Fool’s Ascent. Keith Speights has positions at Berkshire Hathaway and ExxonMobil. The Motley Fool stocks American Tower, Berkshire Hathaway, Crown Castle, Equinix, JPMorgan Chase, Prologis, Vanguard Specialized Funds – Vanguard Real Estate ETF, and Vanguard Whitehall Funds – Vanguard High Dividend. We hold positions in yield ETFs and recommend them. The Motley Fool recommends Broadcom, Johnson & Johnson, and Roche Ag and recommends the following options: A long January 2026 $180 call on American Tower, a long January 2026 $90 call on Prologis, and a short January 2026 $185 call on American Tower. The Motley Fool has a disclosure policy.
Investing $10,000 in each of these three Vanguard ETFs could generate $1,164 in passive income annually.
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