Here's a puzzle for dividend investors: Two dividend ETFs walk into a portfolio. Both promise high yields. Both charge next to nothing in fees. But one has been running circles around the other, and the difference comes down to a simple question of geography. Which one should you buy this month?
The Vanguard International High Dividend Yield ETF (VYMI +0.44%) and iShares Core High Dividend ETF (HDV 0.57%) both target dividend-paying stocks, but they take very different approaches.
- The Vanguard fund looks abroad while iShares stays on American soil.
- Vanguard spreads its bets across thousands of holdings, but iShares focuses on fewer than 100 hand-picked names.
In a year when international stocks have quietly stolen the spotlight from their American cousins, the geographic distinction has made all the difference.
NASDAQ: VYMI
Key Data Points
The scoreboard doesn't lie
Let's get the headline number out of the way: VYMI offered a 35.6% total return over the past year. HDV managed 21.9%. The performance gap isn't a one-time fluke, either. VYMI has also beaten HDV over the past three years (21.7% versus 14.9 annual returns), five years (12.8% versus 10.5%), and 10 years (10.8% versus 9.3%).
I must point out that Vanguard's advantage isn't entirely consistent. The iShares fund took shallower dives in some periods, such as during the 2022 inflation crisis and the early 2025 tariff shock. But Vanguard's international ETF generally pulls ahead in the long run. Vanguard's own analysts expect international stocks to beat U.S. equities over the next decade, too.
VYMI's stocks are also cheaper by traditional valuation measures. Its average P/E ratio sits at 13.6, and HDV's is 21.8. You're paying a lot less for each dollar of earnings with the international fund.
Expense ratios are nearly identical (0.07% vs. 0.08%), so fees aren't a meaningful differentiator. But then there's the yield, which should be a leading indicator of quality for dividend-seeking investors. The Vanguard fund takes another win here by a significant margin of 3.4% to 2.9%.
Image source: Getty Images.
Concentration versus diversification
The funds may aim for similar targets, but they have chosen very different paths.
VYMI is a study in diversification with roughly 1,600 stocks headquartered around the world. 44% of its holdings are found in Europe, 24% in the Pacific region, and 22% in emerging markets. Its five largest holdings each account for 1.4% to 1.6% of the total fund value.
In contrast, the iShares fund currently holds just 74 names, all based in the United States. Its largest holding accounts for 8.3% of the fund, which is more than the sum of the top five Vanguard names.
HDV also carries a much higher turnover rate, typically between 67% and 82% annually, meaning most of the portfolio gets replaced each year. VYMI's annual turnover is just 8.8%. High turnover can create tax inefficiencies and makes it harder for long-term winners to compound their returns.
Finally, let's look at sector diversification. The iShares fund pulls off a win here, with no more than 25% of its portfolio allocated to a single sector (energy and consumer staples, each roughly 24%). VYMI's high yields are built on a more focused stack of financial services, accounting for 41% of the portfolio. No other sector has more than 10% exposure. So if broad sector variety is at the top of your wish list, the iShares ETF could do the trick.
NYSEMKT: HDV
Key Data Points
Picking a winner
HDV has its defenders. It is entirely U.S.-focused, so you're not exposed to currency swings or political drama in distant capitals. Its low beta indicates that it holds up better when markets get choppy. If you want a boring, domestic dividend anchor, it's just fine.
But "fine" isn't the same as "better." VYMI offers superior returns, more diversification (across geographies and stock sizes, but not market sectors), cheaper valuations, and a higher yield. That's a very attractive combo.
For investors looking to add dividend exposure in May 2026, VYMI appears to be the better buy.
