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Vanguard's two largest dividend-themed ETFs are Vanguard High Dividend Yield ETF (NYSEARCA:VYM) and Vanguard Dividend Appreciation ETF (NYSEARCA:VIG).

More individuals are turning to dividend ETFs as an income play, but investors need to be aware that varying dividend ETF products follow different strategies.

At Vanguard, VIG is the bigger product with $10.6 billion in assets, while VYM holds $3.3 billion.

The two sound like they both follow dividend stocks, which catches the attention of investors trying to boost yield in their portfolios. However, they track completely different strategies and they may be more conservative than you might think, as both may serve adequately as a core holding.

Vanguard High Dividend Yield ETF tracks stocks with high dividend yields or companies that have historically issued above-average dividend yields. VYM has an expense ratio of 0.13%.

Top components include Exxon Mobil (NYSE:XOM), Microsoft (NASDAQ:MSFT), Chevron (NYSE:CVX), General Electric (NYSE:GE) and AT&T (NYSE:T). The fund's top sector allocations include consumer staples 19.2%, energy 12.8%, industrials 12.3%, health care 12.2% and financials 10.3%.

VYM follows a market-weight methodology, so high-quality, established firms will dominate the space. Additionally, the fund removes real estate investment trusts, companies that have not issued a dividend in the last year and ranks the remaining stocks by yield. The final product is an ETF that tracks the highest-yield third of the U.S. market.

In contrast, Vanguard Dividend Appreciation ETF follows companies that have raised their dividends year-over-year. VIG has an expense ratio of 0.18%.

Top components include Coca-Cola (NYSE:KO), International Business Machines (NYSE:IBM), Pepsi (NYSE:PEP), Chevron and Exxon Mobil. Top sectors include consumer staples 23.4%, industrials 22.4%, consumer discretionary 15.3% and energy 10.2%.

VIG only tracks companies that have raised dividends form 10 consecutive years and also screens out companies with high leverage and poor cash flow. The fund takes out most value companies and is more growth orientated. Consequently, the ETF may provide dividend yields similar to that of the broader market.

Vanguard Dividend Appreciation ETF


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Max Chen contributed to this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.