Vanguard VYM Offers Broader Diversification Than NOBL

The article compares two prominent dividend-focused ETFs, the Vanguard High Dividend Yield ETF (VYM) and the ProShares S&P 500 Dividend Aristocrats ETF (NOBL), highlighting VYM's superior five-year total return of 98.5% compared to NOBL's 53.1%. This outperformance is attributed to VYM's significantly lower expense ratio (0.06% vs. 0.35%) and its broader portfolio of 589 high-yield stocks, contrasting with NOBL's narrower focus on 70 S&P 500 companies with consistent dividend growth. The analysis suggests that a cost-efficient, broader high-dividend strategy can yield better total returns than a more concentrated approach focused solely on long-term dividend growth.

Analysis

The Vanguard High Dividend Yield ETF (VYM) has significantly outperformed the ProShares S&P 500 Dividend Aristocrats ETF (NOBL) over the past five years, delivering a total return of 98.5% compared to NOBL's 53.1%. This performance differential is notable, especially as the broader S&P 500 index achieved a 113% total return over the same period. VYM's superior return is primarily attributed to its substantially lower expense ratio of 0.06% versus NOBL's 0.35%, alongside a broader investment universe.
The investment strategies of the two ETFs differ fundamentally: VYM tracks the FTSE All-World High Dividend Yield Index, holding 589 U.S. stocks with forecasted above-average dividends and significant exposure to Financial Services (22%) and Technology (16%). In contrast, NOBL focuses on a narrower selection of 70 S&P 500 companies that have consistently increased dividends for at least 25 years, with an equally weighted structure and dominant sectors like Consumer Defensive and Industrials. This highlights a trade-off between broad high-yield exposure and concentrated dividend growth consistency.

The article explicitly states that VYM's lower fees and inclusion of stocks outside the S&P 500 index were key factors in its outperformance. VYM's larger asset base of $81.3 billion AUM compared to NOBL's $11.1 billion AUM further underscores its market presence and potential for scale advantages. The 1-year return data also shows VYM at 10.0% versus NOBL's (1.8%), reinforcing the recent trend of VYM's stronger performance.