It isn't just the S&P 500 that is near its all-time high. International stocks have also delivered excellent performances recently. In fact, one of my favorite dividend-focused exchange-traded funds (ETFs) -- the Vanguard International High Dividend Yield ETF (VYMI +2.04%) -- recently reached its highest level ever, and is up by nearly 20% through the first half of 2025 alone.
One important investment concept to learn is that just because a stock, ETF, or index has reached a new all-time high, that doesn't necessarily mean it's expensive. For example, many investors thought Nvidia was expensive after it rose by 175% in 2021 to what was then its all-time high. Since that time, the company's market cap has quadrupled.
To be sure, I don't necessarily think the Vanguard International High Dividend Yield ETF is going to deliver Nvidia-like returns over the next few years. But I also think that even with the ETF at a peak, it still could be an attractive place to put money to work.
Image source: Getty Images.
The Vanguard International High Dividend Yield ETF
The Vanguard International High Dividend Yield ETF tracks an index -- specifically, the FTSE All-World ex US High Dividend Yield index, which is managed by a subsidiary of the London Stock Exchange. As both their names would suggest, they include 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%.
There are about 1,550 stocks in the portfolio. About 44% of the ETF's assets are invested in European companies, 26% in developed Asia-Pacific markets, and 21% in emerging markets. It's a weighted ETF, which means that larger companies make up larger percentages of the fund's assets, although no single company accounts for more than 2% of the fund.
Speaking of the companies in the Vanguard International High Dividend Yield ETF, don't assume that just because it's an "international" ETF, it will be full of companies you've never heard of. Though there's certainly apt to be an element of that, you might be surprised at how many familiar names you'd be investing in with this fund. Its top 10 holdings include Nestle, Novartis, Toyota, Shell, and Royal Bank of Canada, just to name a few.
Why it could still be a good value
In a nutshell, even though it's at an all-time high, the Vanguard International High Dividend Yield ETF still looks very attractive, especially compared with its U.S. high-dividend counterpart.
The average stock in the Vanguard International High Dividend Yield 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. I generally consider any positive PEG ratio below 1 to be very cheap (and unusual for an index fund). For comparison, the U.S.-focused Vanguard High Dividend Yield ETF (VYM +0.40%) 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.
Of course, there's a lot more to it. Investing in foreign companies carries risk factors that investing in U.S. companies doesn't, like exchange rate risk and political risk. Plus, tariffs and trade wars naturally could affect international companies more than domestic businesses. But this is still a big valuation gap.
The bottom line
I have shares of the Vanguard International High Dividend Yield ETF 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.
