Quick Read
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VYMI returned 25% over the past year and 88% over five years, beating the S&P 500 while still paying a 3.6% trailing yield.
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VNQ's 3.7% yield is the highest but its five-year total return is just 3%, versus the S&P 500's 83% gain.
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VPU lost 6% over the past year despite stable dividends, because rising rates gave investors a safer 5.2% Treasury alternative.
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Three Vanguard ETFs pay trailing yields ranging from 2.9% to 3.7% based on prices as of October 21, 2026. Over the past year, only one of them beat the iShares Core S&P 500 ETF( NYSEARCA:IVV ), and that fund is the Vanguard International High Dividend Yield ETF( NASDAQ:VYMI ). For this analysis, IVV serves as a proxy for the S&P.
The other two funds that we looked at include the Vanguard Real Estate ETF( NYSEARCA:VNQ ) and the Vanguard Utilities ETF( NYSEARCA:VPU ), both of which fell well behind.
Every yield here is the past 12 months of distributions divided by the fund's current price. All three funds paid quarterly over the past year, and none of these payouts is fixed. The returns are total returns, meaning distributions are assumed to be reinvested, and all three funds are measured over the same one-year and five-year periods. VNQ has the highest yield of the three and the lowest five-year return.
VYMI Beat the S&P 500 Fund With Dividend Stocks From Outside the U.S.
VYMI tracks the FTSE All-World ex US High Dividend Yield Index. The index picks companies in developed and emerging markets outside the U.S. that are expected to pay above-average dividend yields, and it leaves out REITs. The fund holds a representative sample of the index's stocks. It costs 0.07% a year.
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The fund's trailing yield is 3.6%, and its one-year total return is 25%, ahead of IVV's 17%.
Over five years, VYMI returned 88%, edging out IVV's 83%. So you got more income than the S&P 500 fund pays without giving up growth along the way.
The quarterly distributions are uneven. Many companies outside the U.S. pay dividends only once or twice a year, so VYMI's payouts swing from quarter to quarter. June's distribution was $1.2569 per share, and September's was $0.817. If you plan to cover monthly expenses from this fund, build your budget around those distribution swings.
VNQ Pays the Highest Yield but Barely Grew in Five Years
VNQ tracks the MSCI US Investable Market Real Estate 25/50 Index, which holds publicly traded equity REITs and other real estate companies. Vanguard says the fund aims for a high level of income and moderate long-term capital appreciation. Its expense ratio is 0.13%.
Tax law creates the income. Under 26 U.S.C. § 857(a)(1), a REIT has to pay out at least 90% of its taxable income to keep its special tax status, so the rent tenants pay flows through to shareholders. That rule is why VNQ's trailing yield of 3.7% is the highest here.
The total return is the lowest. VNQ gained 4% over the past year and only 3% over five years. In those same five years, IVV returned 83%.
The payouts have also slid, from $0.8554 in June to $0.8046 in September.
VPU Lost Money Over the Past Year Even Though Its Payouts Held Steady
VPU tracks the MSCI US IMI Utilities 25/50 Index, which covers large, mid-size, and small U.S. utilities. That includes electric, gas, and water companies, plus independent power producers, energy traders, and renewable power generators. The fund holds every stock in the index in the same ratios. It is classified as nondiversified, which means its biggest holdings can make up a larger share of the fund than a diversified fund would allow. It costs 0.09% a year.
VPU has the lowest yield of the three at 2.9%, and it returned -6% over the past year. Its five-year return of 45% is well below IVV's 83%.
The dividends barely changed, with $1.3009 per share in June and $1.258 in September. Regular payouts did nothing to hold up the stock.
Interest Rates and Currencies Pushed These Funds Apart
Real estate and utility companies have one big thing in common: both borrow heavily to pay for buildings, power plants, and power lines. When rates rise, their borrowing costs go up, and less money is left for shareholders. The 10-year Treasury yield is 5.2% and has been above 5% since late September.
High rates also give investors an alternative. A government-backed Treasury yielding 5.2% pays more than either VNQ or VPU has paid over the past year. That draws income-focused money away from REITs and utilities and weighs on their prices.
VYMI depends on different forces. Its companies earn their profits in other countries, whose interest rates are set by other central banks, and their dividends are paid in foreign currencies. When the dollar weakens, those dividends and share prices are worth more in dollars. When the dollar strengthens, they are worth less. A strong year for international stocks is no reliable predictor of the next year's performance.
Taxes and Currency Swings Shrink What You Actually Keep
Foreign governments usually take a cut of dividends as tax before VYMI receives them. Under 26 U.S.C. § 853, a fund with more than 50% of its assets in foreign companies can choose to pass those taxes through to shareholders, who can then claim a foreign tax credit. The credit helps investors who owe taxes on dividends but does nothing in an IRA, where dividends aren't taxed each year. You carry the currency risk in any account.
VNQ's income is taxed less favorably. Under 26 U.S.C. § 857(c)(2), only the part of a REIT dividend that the REIT designates counts as qualified dividend income. Qualified dividends are taxed at the lower 0%, 15%, or 20% rates, while ordinary dividends are taxed as regular income, according to IRS Publication 550.
There is some relief. 26 U.S.C. § 199A(b)(1)(B) allows a deduction equal to 20% of qualified REIT dividends, and 26 CFR 1.199A-3(d)(1) lets funds pass that deduction to their shareholders. Holding VNQ in a retirement account avoids the issue completely. VPU's utilities are ordinary companies, so their dividends can generally qualify for the lower rates if you hold the shares long enough.
Which of These Vanguard Funds Suits You
If rates ease, VNQ and VPU have the most room to recover, and VNQ's higher payout works best inside an IRA. Watch whether its dividend distributions remain consistent. VYMI suits investors seeking income plus growth, but a stronger dollar could erase its lead, so track currency trends. VPU fits those seeking steady U.S. utility dividends who can tolerate rate-driven price drops.
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