Looking for Foreign Stocks with Powerful Dividends? Look No More! (VYMI)

Declining yields on investment income products has let investors to hunt for high dividend yielding stocks to boost their income. One product that I have actively used and would like to highlight in this article is the Vanguard International High Dividend Yield Index ETF (VYMI).

VYMI starts with a universe comprising of stocks contained in the FTSE All-World ex-U.S. High Dividend Index. It then excludes all REITs.

Ranking the remaining list of stocks by dividend yield, it focuses on the upper half, which comprises roughly 1,200 stocks.

The portfolio weighting for each constituent is proportional to its individual market capitalization. This assures investors that they are invested in a predominantly large-cap product and is a key risk mitigation tool for the fund.

Weighting in this manner means the largest dividend-payers take center stage in the portfolio, while smaller, riskier firms take on a proportionally smaller role. Indeed, the fund’s average return on invested capital (ROIC) stands at 8.1% versus the index average of 5.7%.

Cost efficient

This Vanguard fund, typical of most Vanguard products, is extremely cost efficient, sporting an expense ratio of only 0.27%, well below the average mutual fund expense ratio of 0.80% to 1.00%.  

Obviously, an investor expects a higher than average dividend yield for a product such as this, and VYMI does not disappoint in this regard. Historically, the fund as generated a trailing 12-month dividend yield in a range of 0.5% to 1.0% above the index average.

Currently, it sports a dividend yield of 5.9% as compared to the index yield of 5.2%.

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Gary has more than 30 years of industry experience, which includes research analysis and portfolio management for both retail and institutional accounts. He worked as a Senior Vice President at Wells Fargo Advisors and Wells Fargo Investment Institute for approximately 14 years in total, where he was a senior portfolio manager for both equity and asset allocation portfolios. He was also involved in investment manager due diligence and selection for the firm’s multi-manager portfolio models. Prior to joining Wells Fargo, Gary held senior-level investment management positions with several registered investment advisory organizations. He has been a Chartered Financial Analyst (CFA®) charter-holder since 1989. The CFA is a professional credential earned by investment management professionals after successfully passing three years of rigorous examinations and recording several years as a practising professional within the industry. Gary received his Bachelor of Science in Engineering from Purdue University and his M.B.A. in Finance from The University of Missouri. Additionally, Gary holds his FINRA SIE, Series 7 and Series 66 securities registrations as well as his Missouri Life Accident & Health insurance license. He is a member of the CFA Society of St. Louis and the Financial Executives Networking Group. He resides in Kirkwood, MO with his wife Kathy, and they have three adult age children, Aly, Ryan and Josh.