Vanguard, one of the world's biggest investment management companies - at over $6 trillion of assets under management, just released their distributions for Quarter 1 2021.
The community should know this, but I've been heavily investing in Vanguard's High Dividend Yield ETF (NYSEARCA:VYM) for the better part of 7+ months. The dividend increase news had a tremendous impact on not just my passive income source - in terms of dividend income - but solidifies my investment strategy going forward! Let's see why.
Vanguard High Dividend Yield ETF Dividend Increase
Vanguard recently released, as they do each quarter, the distribution list for their exchange traded funds (ETFs) and mutual funds. Obviously, I have a deep interest in Vanguard's High Dividend Yield ETF.
Vanguard's first quarter dividend for 2021 is in the amount of $0.65640. This is far superior to the first quarter for 2020, which had the amount of $0.55440. See the distribution chart below, directly from Vanguard's VYM page:
Do you see what % of an increase that equates to? We are talking about 18.4% baby! Obviously, that is only for one quarter, therefore, someone could argue, you could multiply that by 25%, for just one quarter's worth of an increase.
This could be representing significant, positive signs for investors and dividend investors alike. 2021 has been a great year for dividend increases and if Vanguard's exchange traded fund is an indication, the next 9 months will be very exciting!
You may be wondering - what is the impact on my dividend stock portfolio? Here is how many shares I own:
Therefore, the impact at 116 shares for a 10 cent increase was approximately $11.83 to my forward income in my taxable stock brokerage account. I also own shares (106) in my IRA account; therefore, a nice little bump was received there as well.
In total, well over $20+ in forward dividend income added. This is as passive of investing that it gets. Owning a dividend growing ETF that isn't hand picking stocks, that I have been purchasing on yes - a weekly basis (except one week - 3/15!).
What does that mean for me and my continual investment into Vanguard's High Dividend Yield ETF?
My investment strategy with VYM - do I continue?
The question and comments I have been receiving lately as VYM has approached AND crossed the $100 share price is - do I continue my investing strategy? See the stock price chart below:
As you can see the price has surged from the $80 mark back in the fall, to over $101 as of the close of business on March 26th, 2021. A nice little 25% bump - not too shabby.
However, due to yield getting lower as we were approaching mid-March/$100 mark - the yield based on previous trailing 12 month dividends, actually dipped not just below 3%, but below 2.9%. Therefore, for ONE WEEK of 3/15 - I actually did not purchase VYM, as we do each month (my wife and I). Yes, I withdrew the strategy. But wait…
The BIG NEWS happened, as discussed above. Vanguard announced this massive first quarter dividend increase of over 18%, which immediately brought the dividend yield BACK UP!
The yield is now hovering back around 3%, therefore - the strategy is continuing and I added more this week of 3/22, baby!
There are 40 weeks left of the year. My wife and I each buy 3 shares, or a total of 6 per week. Therefore, there is potential of 240 more shares of Vanguard baby! At an annual dividend $3.00 (approximately), this equates to $720 in forward dividend to be added. Loving it baby!
Conclusion on Vanguard
There you have it. I am keeping my Vanguard investing strategy - buying 3 shares each, per week, for my wife and me.
This dividend increase could be very POSITIVE for the rest of the dividend investing community for the remainder of 2021.
If we continue to do this, we stand to generate, potentially, over $720 in forward dividend income. Now that's called taking significant steps to financial freedom baby!
How about you? Own Vanguard's VYM? Happy with the increase and believe it's a great sign for the dividend investing community? Share the feedback in the comments! As always, good luck and happy investing folks!
- Lanny
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Dividend Diplomats
Two guys who love Investing, Dividends, Frugality, Passive Income & attempting to Reinvest Our Dividends to one day achieve Financial Freedom! Follow us on your journey towards a work-free life! We share EVERY ASPECT of our journey on our blog, social media, and YouTube Channel. Make sure to follow us so you don't miss an update. Updates include the stocks we are watching, buying, selling, and our overall thoughts about the the marketBlog: http://www.dividenddiplomats.comYouTube Channel: www.youtube.com/dividenddiplomatsTwitter: https://twitter.com/DvdndDiplomats
