Investors have sought more income from their portfolios by turning to dividend stocks. But high-yield dividend stocks can be dangerous if you don't make smart choices. That's why many investors turn to ETFs to help them make smart stock choices for their income needs.
In the following video, Dan Caplinger, the Fool's director of investment planning, looks at the Vanguard High Dividend Yield ETF (NYSEMKT:VYM). Dan notes that the fund has about $9.2 billion in assets under management, split across almost 400 different stocks.
Dan goes on to discuss the Vanguard ETF's selection process, noting that the fund makes efforts to exclude stocks that won't be able to sustain their dividend payouts over time. He runs through some of the stocks you'll find in the ETF's portfolio, noting that General Electric (NYSE:GE) has seen its dividend bounce back from a financial-crisis-era cut and that Microsoft (NASDAQ:MSFT) has joined the many tech stocks that have boosted their yields in recent years. With more solid payers that include Johnson & Johnson (NYSE:JNJ) and Wells Fargo (NYSE:WFC), Dan concludes with some reasons this low-cost ETF is especially worth considering for investors with Vanguard brokerage accounts.
Fool contributor Dan Caplinger owns warrants on Wells Fargo. The Motley Fool recommends Johnson & Johnson and Wells Fargo and owns shares of General Electric, Johnson & Johnson, Microsoft, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.