The best Vanguard dividend funds, in my opinion, combine three great tastes: Dividend income, the relative stability of dividend-paying stocks, and the low fees that investors have come to expect from this leading asset manager and fund provider.
We can’t take for granted the idea that dividend mutual funds will invest with an eye toward both yield and quality. Some products pay above-average dividends today but risk volatility or even future cutbacks in their payouts because of the companies they choose to hold. So if you’re in the market for a dividend-paying mutual fund, you need to select one based on more than just its “headline” yield.
Let me help you with your search by narrowing down the field. The following is a select group of the best Vanguard dividend funds to buy, based not only on their current yield, but other factors including dividend growth rate, expense ratio, and strategy.
The result is a list of dividend mutual funds that should serve you well regardless of any stock market ups and downs.
Disclaimer: This article does not constitute individualized investment advice. Securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.
Why Invest in Dividend Stocks Via Mutual Funds?
The best dividend mutual funds offer investors a way to invest in a group of high-quality stocks that pay above-average dividends with just one purchase.
As a group, dividend stocks are pretty common, but they’re not created equally. Sure, you can find some stocks with a good, sustainable yield and growing payouts. But some only pay nominal dividends that are just a penny or two per share, with no prospect for dividend growth anytime soon. Others might offer generous but unsustainable dividend payouts that might be eliminated altogether in the future.
That’s why mutual funds are a good alternative to individual dividend stocks. These vehicles spread your money around, rather than force you to rely on one company’s specific strengths and weaknesses. And finding the best stocks capable of consistently paying dividends and enjoying significant future dividend growth can be a daunting task, even for seasoned investors. So instead, why not try to gain exposure to dividend-paying stocks via a single, diversified holding that’s tasked with finding great companies for you?
That’s what you’ll get from many Vanguard dividend funds.
Why Vanguard?
Vanguard Group’s arguably biggest claim to fame is the pioneering of index funds, which are simply funds that track a rules-based index, like the S&P 500. In 1976, Vanguard founder Jack Bogle launched the first Vanguard index fund for U.S. retail investors—the Vanguard First Index Investment Trust, which is now the Vanguard 500 Index Fund Admiral Shares (VFIAX).
In the five decades that have followed, Vanguard Funds has grown to become the dominant force in index investing. This financial behemoth now has nearly $12 trillion in assets under management thanks in large part to its simple funds … but not entirely.
Vanguard also grew into the powerhouse mutual fund company it is today by taking care of its clients and genuinely looking after their interests. In addition to its indexed products, Vanguard has a variety of actively managed funds that, despite boasting skilled stock and bond pickers, don’t charge an arm and a leg, either.
Vanguard funds really started (and continue to accelerate) the trend of fee compression. We all collectively pay less in fees and expenses and enjoy better returns because of the index revolution started and led by Vanguard’s founder Jack Bogle. Today, the company’s funds have an average expense ratio of just 0.07%, or a mere 70¢ for every $1,000 invested. As recently as last year, Vanguard announced its largest fee cut in history—a drop in price on 168 share classes across 87 funds that the firm predicted would save its investors $350 million in the first year alone.
Today, I’m going to take a look at the very best Vanguard dividend funds. But you can also find a host of other index funds and investing options for strategies of all shapes and sizes. Whatever your tactics, however, you can have confidence that Vanguard will offer significant scale and rock-bottom fees via its investment options.
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Our Favorite Vanguard Dividend Mutual Funds
Vanguard’s best dividend mutual funds include a variety of strategies and flavors—in other words, no single reader is going to need each fund on this list, but there should be something for virtually everyone.
Importantly, all of these funds are established dividend investments with low cost structures. So not only can you invest with confidence in one or more of these options if they align with your personal investing needs, but you can be assured that they’ll collect very little of your money by way of fees.
Please note that every one of the best Vanguard mutual funds on this list requires an investment of at least $3,000 to get started. However, the majority of these picks have an exchange-traded version that you can purchase for the price of one share (or less, if you have a brokerage account that allows fractional shares). Where appropriate, I’ve mentioned the Vanguard ETF alternatives to these dividend funds to provide flexibility for those who might need it.
Related: 11 Best Vanguard Funds for the Everyday Investor
Best Vanguard Dividend Fund #1: Vanguard Dividend Appreciation Index Fund Admiral Shares
- Style: U.S. dividend-growth stock
- Management: Index
- Assets under management: $120.4 billion*
- Dividend yield: 1.6%
- Expense ratio: 0.07%, or 70¢ per year for every $1,000 invested
- Minimum initial investment: $3,000
Many of the funds on this list will be charged with generating an above-average amount of current income. But I want to start with the Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX) because it’s a great way to demonstrate that there’s more than one kind of dividend fund.
The Vanguard Dividend Appreciation Index Fund tracks the S&P U.S. Dividend Growers Index, which comprises high-quality companies that have ample headroom in their profits to raise dividends, as well as a track record of recent increases (hence “dividend appreciation”). In fact, VDADX doesn’t just view high yield as a lesser priority—the fund’s underlying index excludes the 25% highest-yielding companies, implying that massive dividends can be a liability.
Bear with me for a minute.
Dividend yield is just the dividend divided by the share price. That means a dividend increase can improve the yield … but so can a stock-price decline. So a high dividend, then, is sometimes just the result of spiraling shares, reflecting a troubled company who might not be able to sustain its cash distributions for much longer.
This Vanguard dividend fund also excludes real estate investment trusts (REITs)—a group of stocks we’ll get into later. This likely has less to do with their typically high yields, and more to do with the fact that their dividends aren’t “qualified” and thus taxed as ordinary income at your marginal tax rate.
So, what are you getting?
VDADX is a portfolio of 340 predominantly large-cap stocks**. It’s considered a “blend” fund, too, which means it holds both value and growth stocks. The fund is market cap-weighted, so the larger the company, the more assets the fund allocates to holding its shares; VDADX’s biggest positions right now are in dividend growers such as chipmaker Broadcom (AVGO), Apple (AAPL), and JPMorgan Chase (JPM).
The current yield on dividend-growth funds tends to be modest; indeed, Vanguard Dividend Appreciation pays just half a percentage point more than the broader market right now. Why bother? Well, your future “yield on cost” (the yield on the price you originally paid) might grow significantly as you hold the fund through the years. But also, dividend growth is generally a sign of financial quality, and thus holding this Vanguard index fund is a way to own high-quality companies.
And that’s why VDADX is one of Vanguard’s best dividend funds.
VDADX has an exchange-traded version, the Vanguard Dividend Appreciation ETF (VIG, 0.05% expense ratio), that you can buy for around $220 per share currently. VIG ranks as one of the 20 largest U.S. ETFs of any flavor as measured by assets. That reinforces the popularity of this strategy, even if the current yield doesn’t blow your hair back.
* Many Vanguard funds have multiple share classes, including ETFs. Listed net assets for Vanguard funds in this story refer to assets under management across all of a given fund’s share classes.
** There are different ways to define “cap” levels. We’re adhering to Morningstar’s definition, which says the largest 70% of companies by market capitalization within a fund’s “style” are large caps, the next 20% by market cap are mid-caps, and the smallest 10% by market cap are small caps.
Want to learn more about VDADX? Check out the Vanguard provider site.
Related: 13 Dividend Kings for Royally Resilient Income
Best Vanguard Dividend Fund #2: Vanguard Dividend Growth Fund
- Style: U.S. dividend-growth stock
- Management: Active
- Assets under management: $43.9 billion
- Dividend yield: 1.5%
- Expense ratio: 0.22%, or $2.20 per year for every $1,000 invested
- Minimum initial investment: $3,000
The Vanguard Dividend Growth Fund (VDIGX), as the name suggests, is another way to put dividend-growth stocks in your portfolio. But it’s built somewhat differently than VDADX.
Unlike VDADX, Vanguard Dividend Growth is actively run, currently helmed by Wellington Management Company’s Peter Fisher. And rather than having to strictly follow rules like VDADX does by tracking an index, Fisher has full discretion to build a portfolio of “high-quality companies that have both the ability and the commitment to grow their dividends over time.” His portfolio is much smaller, at a tight 44 stocks currently.
But like VDADX, Vanguard Dividend Growth Fund isn’t too concerned with current yield—it’s focused on future payouts.
As an example, let’s look at credit-card processing giant Visa (V), which is currently in VDGIX’s top 10 holdings. The company’s most recent quarterly distribution of 67¢ is 13% better than it was paying last year; about 80% better than it was paying in 2022; and almost quadruple the 14¢ it was paying near the end of 2015. Sure, Visa’s yield if you bought it right now is below 1%, but Fisher is much more interested in earning Visa’s higher yield on cost over time.
Indeed, many of VDIGX’s holdings are Dividend Aristocrats with 25 or more years of uninterrupted dividend growth. And a few—including Coca-Cola (KO) and Procter & Gamble (PG)—are Dividend Kings, which boast at least 50 years of annual dividend hikes.
Just understand that actively managed funds can sometimes generate much greater turnover (the percentage of the portfolio that is churned in a given year) than index funds. Why does this matter? Trading can generate capital gains that funds must redistribute to their shareholders, and depending on the nature of the distributions, they’re taxed at either short- or long-term capital gains rates. So funds like these are often best held in tax-advantaged accounts such as 401(k)s, individual retirement accounts (IRAs), and health savings accounts (HSAs).
Want to learn more about VDIGX? Check out the Vanguard provider site.
Related: The 10 Best Dividend ETFs [Get Income + Diversify]
Best Vanguard Dividend Fund #3: Vanguard High Dividend Yield Index Fund Admiral Shares
- Style: U.S. high-yield dividend stock
- Management: Index
- Assets under management: $84.5 billion
- Dividend yield: 2.4%
- Expense ratio: 0.08%, or 80¢ per year for every $1,000 invested
- Minimum initial investment: $3,000
Investors who are more concerned with getting a higher yield now will be more interested in the likes of the Vanguard High Dividend Yield Index Fund Admiral Shares (VHYAX).
VHYAX tracks an index made up of companies with larger-than-average dividends. Its 570 total components have been picked based on their current income potential—not hopes of bigger future paydays (though some holdings do grow their dividends, too). So it excludes companies like Apple that pay dividends but offer only modest yield. Instead, it has a bias toward longtime holdings such as Exxon Mobil (XOM) and Johnson & Johnson (JNJ) that pay significantly more than the average large-cap stock.
In the process, VHYAX provides decent sector diversification. Yes, financials make up more than 20% of assets, but after that, four other sectors enjoy double-digit (or near-double-digit) weights. That includes a 17% weighting in tech dividend stocks —a respectable allocation given the technology sector’s reluctance to pay big dividends, but certainly less exposure than you would get in a typical large-cap stock fund. So be aware of these and other sector weightings as you consider how to layer this Vanguard dividend fund into your big-picture strategy.
Vanguard High Dividend Yield Index, like the aforementioned VDADX, explicitly excludes real estate investment trusts.
This fund is also offered in ETF form: The Vanguard High Dividend Yield ETF (VYM, 0.06% expense ratio) currently trades around $145 per share.
Want to learn more about VHYAX? Check out the Vanguard provider site.
Related: 15 Best High-Yield Investments [Safe Options Right Now]
Best Vanguard Dividend Fund #4: Vanguard Equity-Income Fund Investor Shares
- Style: U.S. high-yield dividend stock
- Management: Active
- Assets under management: $63.0 billion
- Dividend yield: 2.1%
- Expense ratio: 0.27%, or $2.70 per year for every $1,000 invested
- Minimum initial investment: $3,000
Vanguard Equity Income Fund Investor Shares (VEIPX) is an actively managed way to get higher-than-average yield.
VEIPX isn’t operated by a strict methodology like VHYAX is. Co-managers Matthew Hand and Sharon Hill split stock-picking duties, and do so in contrasting ways. Hand uses traditional qualitative analysis to pick about 60 to 70 dividend stocks, while Hill applies a more quantitative approach for the remaining holdings. Top picks in the roughly 200-stock portfolio include Broadcom, Bank of America (BAC), and Big Pharma name Merck (MRK).
You face certain risks when you put your money behind an actively managed fund instead of an index fund, particularly given the long history of active managers underperforming their passive benchmarks. However, some investors prefer the peace of mind that comes with knowing someone is hand-picking components—particularly in the area of dividend stocks, where there’s a delicate balance between current yield and future payout potential.
If you have a lot of money to invest, you can get Vanguard Equity Income at a lower cost. Specifically, the Admiral Shares (VEIRX) charge just 0.18% in annual expenses, though you need $50,000 to get started, versus just $3,000 for the VEIPX Investor Shares. Most smaller-money investors might prefer to shoulder the high fees rather than put all their eggs in a cheaper basket.
Want to learn more about VEIPX? Check out the Vanguard provider site.
Related: 8 Best Stock Picking Services, Subscriptions, Advisors & Sites
Best Vanguard Dividend Fund #5: Vanguard Real Estate Index Fund Admiral Shares
- Style: U.S. sector (real estate)
- Management: Index
- Assets under management: $65.4 billion
- Dividend yield: 3.9%
- Expense ratio: 0.13%, or $1.30 per year for every $1,000 invested
- Minimum initial investment: $3,000
Remember how I said a couple of the aforementioned funds excluded real estate? Well, if you want exposure to that sector, you can do so through the Vanguard Real Estate Index Fund Admiral Shares (VGSLX).
Real estate investment trusts, or REITs, are a special class of company created by Congress in 1960 to help make real estate investing more accessible to the average Joe. REITs own and often operate real estate of all kinds—apartment buildings, office complexes, hotels, you name it. And you can buy and sell publicly traded REITs just like any other stock.
But REITs have a few rules that set them apart from traditional companies. Most importantly to income investors: REITs generally enjoy an exemption from federal income taxes in exchange for distributing 90% of their taxable income as dividends to their shareholders. REIT dividends tend to be mighty generous as a result.
Vanguard Real Estate Index Fund, and similar products, allow you to invest in dozens if not hundreds of REITs easily and efficiently. VGSLX itself holds roughly 155 real estate stocks that deal in a variety of property types, including industrial, retail, telecom tower, self-storage, office, residential, and more. Right now, top holdings include health care property owner Welltower (WELL), logistics and warehousing REIT Prologis (PLD) and telecommunications infrastructure play American Tower (AMT).
True to its nature, VGSLX currently offers a healthy yield of almost 4%—more than three times what you’d get from an S&P 500 fund, and even better than you’d receive from most high-yield dividend funds.
You can get VGSLX in ETF form via the Vanguard Real Estate ETF (VNQ, 0.13% expense ratio), which trades around $90 per share.
Want to learn more about VGSLX? Check out the Vanguard provider site.
Related: 16 Best Stock Research & Analysis Apps, Tools and Sites
Best Vanguard Dividend Fund #6: Vanguard International Dividend Appreciation Index Fund Admiral Shares
- Style: International dividend-growth stock
- Management: Index
- Assets under management: $9.4 billion
- Dividend yield: 1.8%
- Expense ratio: 0.16%, or $1.60 per year for every $1,000 invested
- Minimum initial investment: $3,000
You might have noticed that all of the above funds have had a specifically U.S.-centric bent. That’s good—U.S. markets have long been among the most productive in the world, and if you believe in the American economy’s ability to keep growing, that should remain the case.
But most experts would tell you that it’s worth having at least some international exposure for whenever the U.S. catches a cold. Every now and then, like in 2025, the world’s markets beat ours. And the Vanguard International Dividend Appreciation Index Fund Admiral Shares (VIAAX) is one of the best Vanguard index funds you can own when the rest of the globe perks up.
Vanguard International Dividend Appreciation Index has a similar thrust to Vanguard Dividend Growth in that it’s interested in owning high-quality companies, which it does by identifying and holding companies with a history of increasing their dividends. VIAAX tracks the S&P Global Ex-U.S. Dividend Growers Index, which consists of international firms that have improved their payouts on an annual basis for at least seven consecutive years. As an additional quality screen, the index excludes the 25% highest-yielding eligible companies; REITs are excluded, too.
VIAAX is most heavily invested in developed European and Asian markets such as Japan, Switzerland, and the U.K., though it also has a high concentration in Canadian stocks, as well as some exposure to emerging markets such as India and China. But many of its 330 holdings will be plenty familiar to Americans; it’s loaded with blue-chip multinational firms like Swiss food giant Nestlé (NSRGY), German software firm SAP (SAP), and Royal Bank of Canada (RY).
While international blue chips typically yield more than their American counterparts, the focus on dividend growth keeps VIAAX’s yield grounded. But at 1.8%, you’re still getting a little more income than you do from its U.S. sister fund, VDADX.
You can get this Vanguard fund as an ETF, too: the Vanguard International Dividend Appreciation ETF (VIGI, 0.10% expense ratio), which trades around $90 per share.
Want to learn more about VIAAX? Check out the Vanguard provider site.
Related: 9 Best Fidelity Retirement Funds [Low-Cost + Long-Term]
Best Vanguard Dividend Fund #7: Vanguard International High Dividend Yield Index Fund Admiral Shares
- Style: International high-yield dividend stock
- Management: Index
- Assets under management: $14.6 billion
- Dividend yield: 3.8%
- Expense ratio: 0.17%, or $1.70 per year for every $1,000 invested
- Minimum initial investment: $3,000
Among Vanguard dividend funds, it’s difficult to find a higher yield than what’s offered by the Vanguard International High Dividend Yield Index Fund Admiral Shares (VIHAX).
VIHAX’s tracking index is designed to own international stocks with higher-than-average 12-month forward-looking yields. While it will hold large- and mid-cap stocks, a current 85/15 split leans heavily toward the former.
It also has a significant preference for developed international markets (more established but slower-growing economies) over emerging markets (less established but “growthier” economies). European nations including the U.K. and Switzerland are tops at around 45% of assets, followed by Pacific-region developed countries (26%), all emerging markets (21%), and North America developed markets (8%, all wrapped up in Canadian assets).
Vanguard International High Dividend Yield Index is rich with blue chips such as Nestlé, British bank HSBC Holdings (HSBC), and Japanese automaker Toyota (TM). These holdings produce a comparatively massive dividend yield of almost 4% that puts its high-yield U.S. counterparts to shame.
As a general rule, this income and stability makes VIHAX a fruitful holding during downturns across international equities, but it sometimes lags Vanguard International Dividend Appreciation when the market heads higher.
VIHAX’s exchange-traded version is the Vanguard International High Dividend Yield ETF (VYMI, 0.17% expense ratio), which goes for roughly $90 per share right now.
Want to learn more about VIHAX? Check out the Vanguard provider site.
Related: 8 Best Stock Portfolio Tracking Apps [Stock Portfolio Trackers]
Track Your Portfolio With Empower
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- Fee-based wealth management services: Empower also offers several suites of advisory services depending on your investible assets. People with as little as $100,000 can get unlimited financial advice and retirement planning and a professionally managed portfolio. Clients with higher assets can access more services, including dedicated financial advisors, specialists in areas such as real estate and stock options, and even access to private equity.
Use our exclusive link to sign up for the Empower Personal Dashboard, whether that’s for the free tools or the advisory services. If you have $100,000 or more in investible assets, you’ll also be able to schedule a free initial 30-minute financial consultation with an Empower professional.
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- Link Empower to your bank and investing accounts, credit cards, and more to see a single view of useful information and data, including your net worth.
- Empower Advisory Group offers a comprehensive wealth management service known as Personal Strategy. This managed account solution provides clients with discretionary investment management, personalized portfolio construction, and access to financial planning support. Accounts investing $100k to $250k receive unlimited advice and retirement planning help from financial advisors, as well as a professionally managed ETF portfolio with reviews upon request. Higher asset tiers offer access to dedicated advisors, estate planning, and tax specialists, plus additional investment options like access to private equity.**
- Special offer: If you have $100k+ in investible assets, sign up with our link to schedule a free initial 30-minute financial consultation with an Empower professional.
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- Moderately high investment management fee (0.89% AUM) compared to other online advisors (Personal Strategy)
Frequently Asked Questions (FAQs)
How are the best Vanguard dividend funds different from “income” funds?
Many investors have seen funds branded as “income” funds, and it’s easy to get confused. That’s because dividends from stocks are just one way of producing income from your portfolio.
The other major way is to own bonds, which are pooled debt instruments where the company is the borrower who pays interest on that debt to the investor on a regular basis. Beyond that there are also other instruments including preferred stock, or even real estate and private equity investments.
For the purpose of this list, we focused purely on dividends – which are profit-sharing distributions to shareholders of common stock. Those other asset classes all come with their own unique risks, and shouldn’t be seen as interchangeable with the potential risks and rewards delivered by dividend stocks or the mutual funds that hold them.
Want to talk more about your financial goals or concerns? Our services include comprehensive financial planning, investment management, estate planning, taxes, and more! Schedule a call with Riley to discuss what you need, and what we can do for you.
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