Best stocks in the world? this ETF is crushing the S&P 500 in 2025
Are you looking for a way to boost your portfolio and outperform the market? The start of 2025 has been rocky, but one specific investment vehicle is not only holding its own but is leaving the S&P 500 in the dust. It's time to learn about a simple dividend ETF that could be your ticket to financial success.
An unexpected winner in 2025
The U.S. stock market has stumbled out of the gate in 2025. The S&P 500 has dropped, and the tech-heavy Nasdaq Composite has taken a bigger hit. But there's a silver lining: international stocks are shining.
One ETF, in particular, is making waves: the Vanguard International High Dividend Yield Index ETF (NASDAQ: VYMI). It has soared by more than 10% so far this year, a truly impressive feat.
What is vym and why does it matter?
This ETF focuses on international companies with above-average dividend yields. These are companies based outside the United States.
It’s important to note the difference between "international" and "global" funds. International funds invest exclusively in companies outside the U.S. Global funds include both U.S. and international companies.
VYMI tracks the FTSE All-World ex U.S. High Dividend Yield Index. This weighted index includes around 1,450 stocks. Many of its top holdings are household names, like Toyota, Nestlé, Shell, and Toronto-Dominion Bank.
Here are some key features of VYMI:
- About 44% of the portfolio is based in Europe.
- 26% is in the Asia-Pacific region.
- 21% is in emerging markets.
- The ETF has a current dividend yield of 4.4%.
The Vanguard International High Dividend Yield ETF has an expense ratio of 0.17%. It is relatively cheap. This means that for every $10,000 invested, you pay only $17 in annual fees.
What's fueling vym's success?
Several factors are behind VYMI's strong performance in 2025. One significant reason is the weakening U.S. dollar. It’s losing ground against many foreign currencies.
Falling interest rates also play a role. Take the U.K., for example, where short-term bond yields have fallen significantly since the start of 2025. “A falling-rate environment is typically a positive catalyst for dividend stocks,” experts say.
A bargain in disguise
Despite its impressive performance, international high-dividend stocks remain remarkably cheap. The average stock in VYMI has a price-to-earnings (P/E) multiple of 11.8. It trades for 1.4 times book value.
Compare this to its U.S. counterpart, the Vanguard High Dividend Yield ETF (NYSEMKT: VYM). It has a P/E of 19.8 and a price-to-book of 2.8.
Diversification and income in one
The Vanguard International High Dividend Yield Index ETF could be worth a closer look if you want income and portfolio diversification. It could be a strategic move to boost your returns.
Remember, past performance doesn't guarantee future success. But the potential for long-term growth and income generation is definitely there.
Other attractive etfs
While VYMI is a standout performer, there are other dividend ETFs worth considering. They offer diversification and potential for steady income. Here are a few examples:
- Schwab U.S. Dividend Equity ETF (SCHD): This ETF focuses on companies with a history of increasing dividends. It has a tiny expense ratio of 0.06% and a dividend yield of around 3.5%.
- Vanguard High Dividend Yield ETF (VYM): A U.S.-focused ETF with a proven track record. It offers a built-in safety net with consistent income.
- SPDR S&P 500 ETF Trust (SPY): While not strictly a dividend ETF, SPY tracks the S&P 500. It provides exposure to the overall stock market and its long-term growth potential.
The power of consistent investment
You can accumulate wealth over time if you invest regularly in an ETF like Schwab U.S. Dividend Equity ETF. All you have to do is focus on saving money. “That's not an easy task, but it can, along with a decent ETF, truly change your life if you save hard enough for long enough,” notes one expert.