Key Points
This Vanguard ETF has outperformed the S&P 500 and Nasdaq-100 indexes in the past year.
The long-term results are solid, too, with an 11.8% annualized return over the past 10 years.
The Iran war could be a near-term risk to this ETF since it owns stocks in emerging markets.
If you want to invest in international stocks, there are many ways to do it. One tried-and-true method to buy the world beyond America is to choose an international stock exchange-traded fund (ETF), like the Vanguard Total International Stock ETF(NASDAQ: VXUS). This ETF owns 8,691 international stocks and has delivered average annual returns of 10.6% for the past 10 years.
But what if you want international stocks with a better chance of high dividend income? If so, you might want to buy the Vanguard International High Dividend Yield ETF(NASDAQ: VYMI). This fund has outperformed the VXUS for the past 10 years, with average annual returns of 11.8%. And during the past year, the VYMI has outperformed the S&P 500 index and the tech-heavy Nasdaq-100 index.
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Let's look at why this international dividend stock ETF could be a good choice.
VYMI: Diversified international stocks, dividend focus
The Vanguard International High Dividend Yield ETF is, like the popular VXUS, a broadly diversified fund. The VYMI fund owns 1,535 stocks. And it's passively managed, which keeps expenses low -- the fund's expense ratio is only 0.07%.
But here's what makes the VYMI fund different from other international stock funds like the VXUS: The VYMI has an emphasis on stocks that are forecast to pay higher-than-average dividend yields.
Image source: Getty Images.
Here are the top five stocks held by the VYMI, and the approximate forward dividend yield for each:
Stock | Holding as % of Fund | Forward Dividend Yield (as of March 8, 2026) |
|---|---|---|
RocheHolding AG | 1.8% | 2.9% |
HSBCHoldings PLC | 1.7% | 4.5% |
NovartisAG | 1.6% | 3% |
NestléSA | 1.4% | 3.9% |
ToyotaMotor | 1.4% | 2.6% |
Data sources: Vanguard, Yahoo Finance.
Not every high-yield dividend stock is a good buy, and not every stock in the VYMI pays the same high dividend. But that sample list of stocks is promising dividends that are competitive with some of the best high-yield dividend stocks.
Should you buy the VYMI?
If you want to invest in international stocks, it's important to understand the risks. When you buy an international ETF like the VYMI, you are buying hundreds of stocks in a variety of regions and markets. This helps you diversify against the risks of investing too much in any one company, country, or currency.
One risk of investing in the VYMI is that about 21.1% of its holdings are in emerging market stocks. These countries with smaller economies tend to be larger risks for investors during times of rising oil prices and international conflict. We're seeing that now with the stock market volatility from the Iran war.
Ever since Feb. 28, when the Iran war started, the VYMI has declined by about 5%. If oil prices stay high for a long time, this could be bad news for international stocks in oil-importing countries like Japan, which makes up 14.2% of the VYMI fund's holdings.
If the Iran war ends soon, the VYMI share price could recover fast. And this international ETF has a strong track record of annual returns for the past 10 years. Long-term investors should consider buying the VYMI.
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HSBC Holdings is an advertising partner of Motley Fool Money. Ben Gran has positions in Vanguard Total International Stock ETF. The Motley Fool has positions in and recommends Vanguard Total International Stock ETF. The Motley Fool recommends HSBC Holdings, Nestlé, and Roche Holding AG. The Motley Fool has a disclosure policy.
