Do Vanguard ETFs Pay Dividends?
Most Vanguard exchange-traded funds (ETFs) pay dividends on a regular basis, typically once a quarter or year. Vanguard ETFs specialize in one specific area within stocks or the fixed-income realm.
Vanguard fund investments in stocks or bonds typically pay dividends or interest, which Vanguard distributes back to its shareholders in the form of dividends to meet its investment company tax status.
Vanguard offers investors over 70 different ETFs that specialize in specific sector stocks, stocks of a certain market capitalization, foreign stocks, and government and corporate bonds of different durations and levels of risk. The majority of Vanguard ETFs are rated four stars by Morningstar, Inc., with some funds having five or three stars.
Understanding Vanguard ETF Dividends
Vanguard ETF Expense Ratios
One of the more unique features of Vanguard funds, in general, is they are known in the fund industry for expense ratios that are lower than average. As of early 2020, Vanguard ETFs' net expense ratio ranges between 0.03% and 0.32%, while the average expense ratio is about 0.06% for a typical Vanguard ETF.
- Most of Vanguard's 70-plus ETFs pay dividends.
- Vanguard ETFs are noted in the industry for their lower-than-average expense ratios.
- Most of Vanguard's ETF products pay quarterly dividends; some pay annual dividends; and a few pay monthly dividends.
The most expensive Vanguard ETFs tend to be those that invest overseas or have high turnover ratios and specialize in very narrow market niches. The least expensive Vanguard ETFs tend to be those that specialize in corporate or treasury bonds.
Vanguard ETF Dividend Yields
ETFs are typically judged on their dividend distributions based on a 30-day SEC yield, which is a standardized yield developed by the Securities and Exchange Commission (SEC) for the fair comparison of funds. The 30-day SEC yield is calculated based on the last 30-day period and reflects investment income earned by a fund after deducting its expenses.
As of early 2020, over 60 Vanguard ETFs pay dividends in the form of quarterly or annual distributions. While it is fairly uncommon, there are a few Vanguard funds that pay dividends monthly. The 30-day SEC yield for Vanguard ETFs ranges between 0.36% and 5.35% as of May 2020. Equity Vanguard ETFs typically have 2% yields, while bond ETFs have a wide range of yields depending on the portfolio duration and risk.