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Is It Still Too Early to Invest in This Dividend Powerhouse?

HomeIs It Still Too Early to Invest in This Dividend Powerhouse?

Is It Still Too Early to Invest in This Dividend Powerhouse?

Is It Still Too Early to Invest in This Dividend Powerhouse?

Summary

The Vanguard International High Dividend Yield ETF (VYMI) has reached an all-time high, with a nearly 20% increase in value through the first half of 2025. Despite this strong performance, the ETF still appears to be an attractive investment opportunity, offering exposure to high-quality international stocks and reliable income.

The Vanguard International High Dividend Yield ETF

The VYMI tracks the FTSE All-World ex US High Dividend Yield index, which includes only stocks based outside the United States that pay above-average dividends. As of this writing, the ETF has a dividend yield of about 4.1% and a relatively low expense ratio of 0.17%. The portfolio consists of approximately 1,550 stocks, with about 44% invested in European companies, 26% in developed Asia-Pacific markets, and 21% in emerging markets.

The VYMI is a weighted ETF, meaning that larger companies make up larger percentages of the fund's assets. However, no single company accounts for more than 2% of the fund. Some of the top holdings include Nestle, Novartis, Toyota, Shell, and Royal Bank of Canada. While international stocks can be unfamiliar to some investors, this ETF includes a mix of well-known companies that provide exposure to both developed and emerging markets.

Why it could still be a good value

Despite reaching an all-time high, the VYMI appears to be a relatively cheap investment opportunity compared to its U.S.-focused counterpart. The average stock in the ETF has a P/E ratio of just 12.0 and an earnings growth rate of 13.7% over the past five years, giving it a PEG ratio of 0.88. A positive PEG ratio below 1 is generally considered cheap and unusual for an index fund.

For comparison, the U.S.-focused Vanguard High Dividend Yield ETF (VYM) has an average P/E of 19.1 and an earnings growth rate of 10.7%, which gives it a PEG ratio of 1.79. This significant valuation gap suggests that the VYMI could be a good value, even at its current price.

However, investing in foreign companies carries additional risks, such as exchange rate risk and political risk. Tariffs and trade wars can also affect international companies more than domestic businesses. Despite these risks, the VYMI appears to be an attractive investment opportunity for those looking for reliable income and exposure to high-quality international stocks.

The bottom line

I have shares of the VYMI in my portfolio and it has been one of my top-performing investments of 2025. However, that doesn't mean that it's expensive, and I'd be comfortable adding to my investment at the current price. And if it stays this cheap relative to U.S. high-dividend stocks for long, that's exactly what I plan to do.

Should you invest $1,000 in Vanguard International High Dividend Yield ETF right now?

Before making an investment decision, consider the following:

  • The Motley Fool Stock Advisor analyst team has identified 10 top stocks for investors to buy now, and the VYMI wasn't one of them.
  • Historically, the Stock Advisor team's recommendations have produced significant returns, with a total average return of 1,047%.
  • It's worth noting that Stock Advisor's outperformance is compared to the S&P 500's 180% return.

If you're interested in investing in high-quality international stocks and reliable income, the VYMI may be an attractive option. However, as with any investment decision, it's essential to do your own research and consider your individual financial goals and risk tolerance.

Conclusion

The Vanguard International High Dividend Yield ETF (VYMI) has reached an all-time high, but it still appears to be a relatively cheap investment opportunity compared to its U.S.-focused counterpart. With a dividend yield of about 4.1% and a low expense ratio of 0.17%, the VYMI provides exposure to high-quality international stocks and reliable income. While investing in foreign companies carries additional risks, the VYMI appears to be an attractive investment opportunity for those looking for reliable income and exposure to high-quality international stocks.

It's essential to remember that past performance is not a guarantee of future results, and it's always crucial to do your own research and consider your individual financial goals and risk tolerance before making any investment decision. However, if you're interested in investing in the VYMI or other dividend-focused ETFs, it may be worth considering the potential benefits and risks associated with these types of investments.

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