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 60 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 risk. The majority of Vanguard ETFs are rated four stars by Morningstar, Inc., with some funds having five or three stars. One unique feature of Vanguard funds, in general, is they are known in the fund industry for their low expense ratios. As of October 2015, Vanguard ETFs' net expense ratio ranges between 0.05 and 0.34%, while the average expense ratio is about 0.13% for a typical Vanguard ETF. The most expensive funds tend to be those that invest overseas or have high turnover ratios and specialize in very narrow market niches.
Vanguard ETFs' 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 October 2015, over 50 Vanguard ETFs pay dividends in the form of quarterly or annual distributions. While it is uncommon, there are a few Vanguard funds that pay dividends monthly. The 30-day SEC yield for Vanguard ETFs ranges between 0.46 and 5.11%. Equity Vanguard ETFs typically have 2% yields, while bond ETFs have a wide range of yields depending on the portfolio duration and risk.