VYM vs VOO: Side-by-Side ETF Comparison

VYM vs VOO comes down to dividends versus growth - VYM pays 2.44% yield but VOO only 1.13%, while VOO's tech-heavy portfolio (35% vs VYM's 17%) delivered slightly better 1-year returns of 14.43% versus VYM's 13.95%. VYM trades at a lower valuation with a 16.3 P/E compared to VOO's 22.4, making it the value play for income-focused investors.

Table of Content

• Annual & Cumulative Returns
• Risk Metrics
• Dividend Yield & Growth
• Fees & Liquidity
• ETF Composition: Asset Classes
• Regional Allocation
• Sector Weights
• Top 10 Holdings
• Valuation & Growth Metrics
• Which ETF Fits Your Portfolio?

ETF Issuers & Investment Objective

Both VYM and VOO come from Vanguard, so they share the same low-cost DNA, but they're built for different purposes. VYM tracks the FTSE High Dividend Yield Index, which means it screens the U.S. market for companies that pay above-average dividends, then weights them by market cap. The result is a portfolio that currently yields 2.44% - more than double VOO's 1.13% - and tilts toward slower-growing, cash-rich sectors like financials (22% of assets) and healthcare (13%). Think established insurers, regional banks, and drug makers that send shareholders regular checks.

VOO, on the other hand, simply owns the S&P 500 in its entirety. It's a "large-blend" fund because it holds both growth and value stocks in one package, with a 35% stake in tech giants like Apple and Microsoft. That growth exposure pushes the portfolio's average P/E to 22.4, well above VYM's 16.3, and explains why its dividend stream is lower - many of the fastest-expanding companies prefer to reinvest cash rather than pay it out. The trade-off shows up in total returns: over the past year VOO edged ahead 14.4% versus VYM's 14.0%, but the gap can flip quickly when value stocks are in favor.

Annual & Cumulative Returns

VYM's dividend focus hasn't translated to superior returns. The fund trailed VOO by nearly 8 percentage points annually over the past three years, with the gap widening to 3.4 points over five years. Even during this year's volatile markets, VYM's 2.91% YTD gain only modestly outpaced VOO's 1.07% - hardly the defensive outperformance income investors might expect.

The longer view tells the same story. VOO's 15.69% ten-year average leaves VYM's 12.28% in the dust, demonstrating that the S&P 500's growth orientation has consistently trumped high-dividend strategies. While VYM offers nearly double the yield at 2.44% versus 1.13%, that extra income hasn't compensated for the significant underperformance. Investors choosing between these funds face a clear trade-off: accept lower returns for higher current income with VYM, or sacrifice yield for superior growth potential with VOO.

Risk Metrics

VYM's value tilt delivered a smoother ride over the past twelve months, posting volatility of 9.32% against VOO's 10.99%. The gap narrows when you stretch the window to three years, but the dividend-heavy portfolio still edges out the S&P 500 tracker, 11.48% to 11.96%. Those extra few basis points of calm come largely from the fund's defensive sector mix and its 2.44% cash dividend, which cushions price swings when markets wobble.

The Sharpe ratio tells a different story. VOO's 1.4 reading over the last three years is double VYM's 0.71, meaning each unit of risk taken in the broad-market fund was rewarded with almost twice the excess return. In plain terms, VYM gave you less volatility, but it also gave you less compensation for whatever volatility remained. Investors who prize a quieter path and the higher income stream may gladly accept that trade-off; those seeking maximum risk-adjusted punch will tilt toward the S&P 500.

Dividend Yield & Growth

VYM's 2.44% yield is more than double VOO's 1.13%, which makes sense given its focus on companies that pay higher-than-average dividends. This 1.31 percentage point gap translates to real money - on a $100,000 investment, that's roughly $1,200 more in annual dividend income from VYM.

The trade-off shows up in the numbers. VYM's lower P/E of 16.3 versus VOO's 22.4 suggests investors pay less for each dollar of earnings in the dividend-focused fund. Yet VYM's 1-year return of 13.95% lagged VOO's 14.43%, illustrating how chasing yield can mean missing some growth. Neither ETF offers a clear payment frequency advantage since both distribute quarterly, so the yield difference remains the main consideration for income-focused investors.

Fees & Liquidity

VOO costs half as much to own as VYM: 3 basis points versus 6. On a $50,000 position that’s $15 a year versus $30 hardly a budget-buster, but the gap widens as the account grows. Both funds trade free at Vanguard and most major brokers, so commission drag is a non-issue for buy-and-hold investors. Spreads are consistently a penny or less on VOO because it prints over 50 million shares daily; VYM is still liquid, but you’ll occasionally see two-cent spreads in the first hour or after-hours, so market orders larger than a few hundred shares may benefit from a limit order.

The real cost difference shows up in the distribution yield. VYM’s 2.44% payout helps offset its higher fee, while VOO’s 1.13% yield means you’re effectively paying the expense ratio out of slower-dividend pocket. Over ten years the extra three basis points of VYM add up to roughly 0.3% of principal small potatoes compared with the underlying index performance, yet worth remembering if you’re debating whether to tilt toward dividends or stick with the broad market.

ETF Composition: Asset Classes

VYM and VOO both keep things simple: each parks more than 98% of its assets directly in U.S. common stocks, with only a token sleeve of foreign names and a few basis points left in cash for daily liquidity. The split is what you’d expect from plain-vanilla index trackers, yet the tiny gap VOO’s 99.1% versus VYM’s 98.1% domestic weight means the dividend-focused fund already has a touch less home-country purity, a reminder that chasing yield can pull you into the occasional Canadian pipeline or U.K. pharma ADR.

That one-percentage-point difference won’t move the volatility needle, but it does hint at the underlying philosophy. VOO owns the entire S&P 500 market-cap stack, so its 0.5% non-U.S. slice is mostly multinationals with overseas revenue. VYM’s 1.7% foreign allotment, while still small, reflects a screen that starts with dividends; if a high-payer happens to list abroad, it can slip in. For investors, the takeaway is practical: either fund gives you essentially a pure U.S. large-cap bet, just know that VYM’s yield hunt opens the door a crack wider to non-domestic names and the currency noise that can ride with them.

Regional Allocation

Both funds plant nearly every dollar stateside, yet VYM leaves a slightly larger crack in the door for overseas exposure. While VOO keeps 99.5% of its assets in North American companies, VYM trims that to 98.3%, freeing up about 1.7% for markets such as the U.K., developed Europe, and a sliver of emerging Asia. The difference is modest roughly $1.70 per $100 but it shows up in the weightings: VYM’s U.K. stake is five times larger than VOO’s 0.03%, and its combined Europe and Asia emerging allocations edge toward 1%, whereas VOO barely registers there.

For most portfolios this gap won’t move the needle; currency swings and foreign earnings are still minimal headwinds. Still, if you like the idea of a dividend tilt with a whisper of international diversification baked in, VYM offers it without forcing you to buy a separate ex-U.S. fund. VOO, by contrast, gives you a purer play on the domestic economy and the S&P 500’s familiar tech-heavy lineup. Pick the one whose slight overseas footprint, or lack thereof, better matches the rest of your holdings.

Sector Weights

VYM tilts heavily toward dividend-rich corners of the market, so you get a 22% slice in financial services and a combined 32% in the defensive trio of healthcare, consumer staples and utilities. Tech still shows up at 17%, but it’s a supporting actor rather than the star. In VOO, technology dominates at 35%, nearly matching VYM’s weight in financials, energy and healthcare combined. That single-sector bet is the main driver of the S&P 500’s recent returns, and it shows up plainly in the allocation gap between the two funds.

The knock-on effects are just as stark. Energy gets an 8% weight in VYM triple VOO’s 3% while communication services and real estate barely register in the dividend fund. If you hold VOO you’re basically along for the Big-Tech ride; if you hold VYM you’re collecting a 2.4% yield and trading some upside for a buffer when growth stocks sell off. Neither mix is “right,” but the sector spread explains why VYM’s P/E sits six points lower and why its performance can diverge sharply in any given year.

Top 10 Holdings

VYM's top holdings read like a who's who of dividend stalwarts, with Broadcom leading at 7.57% - a tech company that happens to pay generous dividends. The rest of the top five spreads across financial services (JPMorgan at 4.15%), energy (Exxon Mobil at 2.41%), and defensive consumer stocks (Johnson & Johnson and Walmart each around 2.3%). This diversity reflects the fund's mandate to find companies with above-average dividend yields, not necessarily the market's biggest names.

VOO's concentration tells a different story entirely. NVIDIA dominates at 7.75%, followed by the familiar tech triumvirate of Apple (6.87%) and Microsoft (6.15%). Add Amazon and Alphabet, and you've got nearly 28% of the fund in just five mega-cap tech stocks. This weighting mirrors the S&P 500's current composition, where technology's influence has ballooned to 35% of the index. The contrast is stark: VYM's largest holding represents less than 8% of the fund, while VOO's top five holdings make up over a quarter of its assets.

Valuation & Growth Metrics

VYM trades at 16.3 times earnings and 2.7 times book value, roughly a quarter below the multiples carried by VOO at 22.4 and 4.6 respectively. That discount is the clearest evidence of what you’re buying: a basket of large-cap value stocks that the market has already marked down. The lower price tags also show up on the top line VYM’s price-to-sales ratio of 1.9 sits well under VOO’s 3.2, reflecting the heavier weight in slower-growing financials and consumer staples rather than the tech-heavy S&P 500.

Growth expectations follow the same pattern. Long-term earnings growth for VYM holdings is pegged at 9.1%, a full point and a half below VOO’s 10.5%, and the historical earnings pace trails by an even wider seven-point gap. Sales growth shows the same tilt: 5.2% for VYM versus 8.0% for VOO. In short, you’re accepting slower expansion in exchange for the cheaper entry price and the higher 2.4% dividend yield that comes with it.

Which ETF Fits Your Portfolio?

VYM makes sense when you want the market to pay you while you wait. Its 2.44% yield is more than double VOO's 1.13%, and the portfolio's 16.3 P/E suggests you're buying companies at lower starting prices. The trade-off shows up in performance: VYM lagged the S&P 500 by 0.48% over the past year, and its 22% financial-services weight can drag when rates move against banks.

VOO keeps things simple. You get the whole market in one shot - tech giants and all - which explains both the 22.4 P/E and the 14.43% one-year return. The 0.03% expense ratio is half of VYM's already-low fee, so more of every dividend dollar stays in your pocket. If you don't need the income now and prefer growth without picking sectors, VOO does the job with less fuss.

If you want to have look at other ETF comparisons, check out this: Fund Overlap Tool

Data sources: The data has been obtained from the ETF provider's website and ETF fact sheet.