VYM vs. DGRO: What’s The Difference?

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and DGRO is a iShares Large Value fund. So, what’s the difference between VYM and DGRO? And which fund is better?

The expense ratio of VYM is 0.02 percentage points lower than DGRO’s (0.06% vs. 0.08%). VYM also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VYM has provided lower returns than DGRO over the past ten years.

In this article, we’ll compare VYM vs. DGRO. We’ll look at performance and annual returns, as well as at their risk metrics and holdings. Moreover, I’ll also discuss VYM’s and DGRO’s portfolio growth, fund composition, and industry exposure and examine how these affect their overall returns.

Summary

VYM DGRO
Name Vanguard High Dividend Yield Index Fund ETF Shares iShares Core Dividend Growth ETF
Category Large Value Large Value
Issuer Vanguard iShares
AUM 48.5B 20B
Avg. Return 12.20% 12.46%
Div. Yield 2.79% 2.04%
Expense Ratio 0.06% 0.08%

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) is a Large Value fund that is issued by Vanguard. It currently has 48.5B total assets under management and has yielded an average annual return of 12.20% over the past 10 years. The fund has a dividend yield of 2.79% with an expense ratio of 0.06%.

The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

VYM’s dividend yield is 0.75% higher than that of DGRO (2.79% vs. 2.04%). Also, VYM yielded on average 0.26% less per year over the past decade (12.20% vs. 12.46%). The expense ratio of VYM is 0.02 percentage points lower than DGRO’s (0.06% vs. 0.08%).

Fund Composition

Industry Exposure

VYM vs. DGRO - Industry Exposure

VYM DGRO
Technology 9.77% 18.98%
Industrials 10.14% 12.52%
Energy 7.12% 0.11%
Communication Services 5.91% 4.53%
Utilities 7.27% 7.34%
Healthcare 13.61% 17.55%
Consumer Defensive 14.13% 10.24%
Real Estate 0.02% 0.0%
Financial Services 22.05% 18.47%
Consumer Cyclical 5.57% 7.42%
Basic Materials 4.41% 2.83%

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has the most exposure to the Financial Services sector at 22.05%. This is followed by Consumer Defensive and Healthcare at 14.13% and 13.61% respectively. Basic Materials (4.41%), Consumer Cyclical (5.57%), and Communication Services (5.91%) only make up 15.89% of the fund’s total assets.

VYM’s mid-section with moderate exposure is comprised of Energy, Utilities, Technology, Industrials, and Healthcare stocks at 7.12%, 7.27%, 9.77%, 10.14%, and 13.61%.

The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

VYM is 3.58% more exposed to the Financial Services sector than DGRO (22.05% vs 18.47%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 3.89% higher and 3.94% lower respectively (14.13% vs. 10.24% and 13.61% vs. 17.55%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 1.11% more of the fund’s holdings compared to DGRO (15.89% vs. 14.78%).

Holdings

VYM - Holdings

VYM Holdings Weight
JPMorgan Chase & Co 3.53%
Johnson & Johnson 3.28%
The Home Depot Inc 2.59%
Procter & Gamble Co 2.48%
Bank of America Corp 2.35%
Exxon Mobil Corp 2.02%
Comcast Corp Class A 1.96%
Verizon Communications Inc 1.75%
Intel Corp 1.71%
Cisco Systems Inc 1.69%

VYM’s Top Holdings are JPMorgan Chase & Co, Johnson & Johnson, The Home Depot Inc, Procter & Gamble Co, and Bank of America Corp at 3.53%, 3.28%, 2.59%, 2.48%, and 2.35%.

Exxon Mobil Corp (2.02%), Comcast Corp Class A (1.96%), and Verizon Communications Inc (1.75%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the VYM’s holdings at 1.71% and 1.69%.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

Risk Analysis

VYM DGRO
Mean Return 1.04 0
R-squared 88.88 0
Std. Deviation 12.69 0
Alpha -0.7 0
Beta 0.88 0
Sharpe Ratio 0.93 0
Treynor Ratio 13.24 0

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Treynor Ratio of 13.24 with a Sharpe Ratio of 0.93 and a Standard Deviation of 12.69. Its Alpha is -0.7 while VYM’s Mean Return is 1.04. Furthermore, the fund has a Beta of 0.88 and a R-squared of 88.88.

The iShares Core Dividend Growth ETF (DGRO) has a Standard Deviation of 0 with a R-squared of 0 and a Beta of 0. Its Mean Return is 0 while DGRO’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Alpha of 0.

VYM’s Mean Return is 1.04 points higher than that of DGRO and its R-squared is 88.88 points higher. With a Standard Deviation of 12.69, VYM is slightly more volatile than DGRO. The Alpha and Beta of VYM are 0.70 points lower and 0.88 points higher than DGRO’s Alpha and Beta.

Performance

Annual Returns

VYM vs. DGRO - Annual Returns

Year VYM DGRO
2020 1.14% 9.47%
2019 24.2% 30.02%
2018 -5.87% -2.24%
2017 16.42% 22.84%
2016 16.87% 15.27%
2015 0.33% -0.62%
2014 13.47% 0.0%
2013 30.26% 0.0%
2012 12.68% 0.0%
2011 10.5% 0.0%
2010 14.17% 0.0%

VYM had its best year in 2013 with an annual return of 30.26%. VYM’s worst year over the past decade yielded -5.87% and occurred in 2018. In most years the Vanguard High Dividend Yield Index Fund ETF Shares provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 12.68%, 13.47%, and 14.17% respectively.

The year 2019 was the strongest year for DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VYM vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $16,141 12.20%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in VYM would have resulted in a final balance of $16,141. This is a profit of $6,141 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.20%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

VYM’s CAGR is 0.26 percentage points lower than that of DGRO and as a result, would have yielded $3,439 less on a $10,000 investment. Thus, VYM performed worse than DGRO by 0.26% annually.


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