VYM's $94.6B Portfolio: Dividend Kings Support Durable Income Stream

Portfolio Overview and Performance

Vanguard High Dividend Yield ETF (VYM) has $94.6 billion in net assets, tracking the FTSE High Dividend Yield Index. The fund holds approximately 550 U.S. large-cap stocks with above-average forecast yields, weighted by market cap. Over the past year, VYM delivered a 21.6% total return, and 76.6% over five years. The 10-year Treasury yield near 4.62% raises the question of whether VYM's distribution justifies its equity risk premium.

Top Holdings and Dividend Coverage

Concentration is notable: Broadcom represents about 8% of assets, followed by JPMorgan (3%), Exxon (3%), and Johnson & Johnson (2%). Other significant holdings include Caterpillar, AbbVie, Bank of America, Home Depot, Chevron, and Cisco. These top ten positions drive the majority of VYM's cash yield.

Dividend history for key holdings shows strong coverage. Johnson & Johnson raised its quarterly payout to $1.34 in Q2 2026, extending its Dividend King streak. With trailing EPS of $8.63 against an annualized dividend near $5.36, coverage is comfortable. Procter & Gamble lifted its quarterly dividend to $1.0885, with free cash flow of roughly $3 billion per quarter easily funding the payout. Coca-Cola raised its dividend to $0.53 for 2026, with Q1 free cash flow up 131.9% year over year and management guiding to about $12.2 billion in 2026 FCF.

AbbVie presents a more nuanced picture. Humira revenue fell 38.6% to $688 million last quarter, but Skyrizi and Rinvoq now generate a combined $6.6 billion per quarter with strong double-digit growth. Full-year adjusted EPS guidance was raised to $14.08–$14.28, providing roughly 2x coverage on the $6.92 annualized dividend. AT&T has held its quarterly dividend at $0.2775 for four consecutive years, with management guiding to $18 billion or more in 2026 FCF. However, net debt/EBITDA at 2.71x remains above the 2.5x target, making dividend growth unlikely. American Electric Power nudged its quarterly payout to $0.95, but a $78 billion five-year capex plan and $2.6 billion equity offering may keep per-share dividend growth in low single digits.

What it means for income investors

VYM's distribution is well-supported by blue-chip free cash flow, with even weaker holdings covering current payouts. The realistic risk is stagnant dividend growth from a few holdings, but the fund's self-cleaning index and low fees make it a durable income vehicle for those seeking diversified exposure to high-yield U.S. equities.

Reporting based on: 24/7 Wall St.. Figures verified against market data where available.