Many investors are currently showing interest in two big goals: diversifying away from America, and diversifying beyond tech and into "safer" dividend stocks.
There's no such thing as a safe stock, but the Vanguard International High Dividend Yield ETF (VYMI +0.44%) can deliver high dividends from reliably profitable global companies, most of which are outside the tech sector.
Let's take a closer look at why the Vanguard International High Dividend Yield ETF could be a good fit for these two investment strategies.
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Goal No. 1: Diversify beyond the U.S. stock market
For most of the past 15 years, American stock markets have delivered exceptionally high returns compared to the rest of the world. But that trend might be changing. The Vanguard International High Dividend Yield ETF has outperformed the U.S. S&P 500 index year to date and over the past year, gaining 31.6% in the last 12 months.
VYMI Total Return Level data by YCharts
In the past three years, this fund has delivered impressive 21% annualized returns (by net asset value).
If you believe that the U.S. stock market might be overvalued and due for a correction, buying this international ETF can give you exposure to more than 1,500 global stocks. This fund's holdings come from 45 countries, with a mix of developed and emerging markets. The top countries include Japan, the United Kingdom, Canada, Australia, Switzerland, China, France, Germany, and Taiwan.
American stocks aren't the only opportunity for American investors. If you want to buy the rest of the world beyond the U.S. stock market, the Vanguard International High Dividend Yield ETF can give you a well-diversified range of global stocks.
Goal No. 2: Get into "safer" stocks away from tech
NASDAQ: VYMI
Key Data Points
Dividend stocks don't always outperform the broader market. But companies in a high-dividend stock ETF tend to be well-established and consistently profitable. This usually makes their performance calmer and less volatile than growth stocks.
For example, if you believe that U.S. tech stocks are overvalued or are worried about a possible bubble in artificial intelligence (AI) stocks, buying high-yield dividend stocks can (usually) diversify against those risks.
The Vanguard International High Dividend Yield ETF can put your money into different parts of the global stock market that might be less exposed to a possible tech downturn. The top stock holdings in this fund are in totally different sectors than the AI trade. The ETF's top 10 stocks include:
- Four major global financial institutions: HSBC Holdings, Royal Bank of Canada, Commonwealth Bank of Australia, and Mitsubishi UFJ Financial Group.
- Two pharmaceutical giants: Roche Holding AG and Novartis.
- One global energy company: Shell PLC
- One auto manufacturer: Toyota Motor
- One household-name consumer staples brand: Nestlé
- One mining company: BHP Group
These stocks are not involved in the AI boom for the most part. If you want to diversify your portfolio away from a tech-heavy allocation, the Vanguard International High Dividend Yield ETF can fit that goal. And the actual dividends are impressive -- the fund's dividend yield of 3.47% is competitive with some of the best dividend ETFs.
