VYM vs VYMI: Which Is Better for Income?

It tracks the FTSE High Dividend Yield Index, which ranks US dividend payers by forecast yield, excludes REITs, and works down that ranking until roughly half the market value of the eligible universe is covered. Selection is on yield alone with no quality or growth screen, so the portfolio is wide and diversified but includes some payers a stricter screen would reject. Weighting is by market cap, meaning the biggest dividend-paying companies dominate.

Suits an investor who wants dependable above-market income with maximum breadth and minimum concentration risk. Less suitable if you specifically want dividend growth or a fundamental quality filter, since neither is part of the selection rule.

Core dividend holding

It tracks a FTSE All-World ex US High Dividend Yield index, covering developed and emerging markets and screening on forecast dividend yield in the same way as the US version. Non-US markets carry a structurally higher payout culture, so the headline yield generally runs above US dividend funds, and the sector mix leans toward financials, energy and materials rather than US-style consumer and technology names. Two mechanical consequences matter: distributions are lumpier because many foreign companies pay once or twice a year rather than quarterly, and foreign withholding tax is deducted at source, recoverable as a foreign tax credit in a taxable account but simply lost inside an IRA.

Suits an investor adding geographic diversification to a US-heavy income portfolio and willing to accept currency swings. A poor fit inside a tax-deferred account, where the foreign tax credit cannot be claimed, and for anyone who needs an even payment every quarter.

International dividend income