With the S&P 500 recently hitting another all-time high, many stocks and ETFs feel expensive right now. However, there are excellent opportunities for long-term investors if you know where to look.
In the world of dividend stocks, there are still some great places to put your money to work, and that’s especially true when it comes to international dividend stocks. That’s why he Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) It deserves a second look, even though its stock is near its all-time high.
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As the name suggests, the Vanguard International High Dividend Yield ETF tracks an index of stocks based outside the United States that pay above-average dividends. It has an expense ratio of 0.17%, which is solid for a specialized index fund like this, especially since many of the stocks it owns only trade on foreign stock exchanges.
This is a broad index with exposure to both emerging and developed markets around the world. The fund owns more than 1,500 stocks, most of which are larger companies. Although it’s a weighted index, meaning larger companies make up a larger share of assets, it’s not as heavy as an S&P 500 index fund. In fact, no stock makes up more than 1.8% of the portfolio.
Speaking of stocks, don’t think that just because it’s an international stock ETF that it’s a group of companies you’ve never heard of. Major holdings include Novartis (NYSE: NVS), Be protected (OTC: NSRGY)and toyota (NYSE: TM)just to name a few.
Despite being close to an all-time high, you might be surprised at how affordable this ETF is. The average stock in the portfolio trades at just 13.5 times earnings, and those earnings are growing at an average rate of 12.8% annually. Meanwhile, the average stock in the US focused Vanguard High Dividend Yield ETF (NYSEMKT:VYM) has a P/E ratio of more than 20 and a Slower profit growth rate of 11.6%. VYM-Vanguard High Dividend Yield ETF | Vanguard
There are certainly some risks associated with investing in international stocks, such as currency fluctuations and geopolitical headwinds, but this ETF offers a massive discount even with those things in mind. At the current price, the Vanguard International High Dividend Yield ETF has a dividend yield of about 3% and could be a great addition to your portfolio in terms of diversification, income, and total return potential.