2 Vanguard ETFs Dividend Investors Can Buy and Hold Forever

Whether you’re a new, seasoned investor or nearing retirement, investing in an exchange-traded fund (ETF) can make a lot of sense. ETFs can be an easy option if you want to simplify your strategy and aren’t sure where to put your money. And having the same ETF to put money into on a recurring basis can be a great way to build your portfolio balance over the years.

Vanguard is known for being a top fund manager. Its ETFs typically generate excellent returns, offer plenty of diversification, and their expenses aren’t high. And some of their funds also pay dividends that are better than what you’d get with the average investment on S&P 500.

A few Vanguard ETFs you can buy and comfortably hold for the rest of your life are Shares ETF Vanguard Value Index Fund (VTV 0.56%) and the Vanguard High Dividend Yield Index Fund Shares ETF (VYM 0.44%). This is why these funds can be such attractive long-term options, especially for income investors.

1. Shares ETF Vanguard Value Index Fund

The Vanguard Value Index ETF has a minuscule 0.04% expense ratio, which is incredibly low for an ETF. And this is important because it means the fees won’t eat away at your long-term profits. The ETF also yields 2.3%, which is a point better than the S&P 500 average of 1.3%.

What makes the fund a safe investment is that it focuses on large-cap stocks. Within the ETF, you will find large and reputable companies such as Berkshire Hathaway, JPMorgan Chaseand UnitedHealth Group among his greatest holdings.

By investing in reputable stocks, investors are not exposed to high risks with this ETF, as these are the types of investments that should remain fairly stable over the years. And even the fund’s largest holding represents only 3.4% of its total weighting. There is not much exposure to a single stock.

There are 341 stocks in the fund, and the ETF averages a price-earnings multiple of just under 21 as it lives up to its name as a good value investment.

Over the past 10 years, it has generated total returns (including dividends) of around 171%. This represents a compound annual growth rate of 10.5%. If the fund continued to average this kind of annual return going forward, it would take about 23 years for its value to increase by a multiple of 10.

2. Shares ETF Vanguard High Dividend Yield Index Fund

For investors who want a slightly higher yield, the Vanguard High Dividend Yield fund pays 2.8% in dividends. It comes with a slightly higher expense ratio, but at 0.06%, it’s still minimal in the grand scheme of things.

Like the Value Index, it also tracks large-cap stocks, but it focuses more on stocks that offer high yields, which in turn allows it to offer an above-average payout. There are several stocks in this ETF, with a total of 550 stocks at the end of August.

But the composition is a little different at the top as names like Johnson & Johnson, Procter & Gambleand ExxonMobil are among his greatest holdings. What those stocks have in common is a reputation for paying dividends and growing them for decades.

Over the past 10 years, the fund has generated slightly less impressive returns than the Value fund, but at 160%, they are still strong. For risk-averse investors who want excellent dividend income, it’s hard to go wrong with any of these long-term investments.