Top Vanguard ETF Crushing S&P 500 Returns So Far in 2026
2026-07-24 09:15
•David Dierking •The Motley Fool
••••• ••• Axe Capital view
Why South African Investors Should Watch Dividend Stocks Now
Dividend-focused funds like Vanguard's VYM are outperforming growth indexes early in 2026, signaling a shift worth noting for JSE investors.
The global market’s tilt toward dividend and value stocks, as seen in the Vanguard High Dividend Yield ETF (VYM) beating the S&P 500 by over 3% year-to-date, is no coincidence. Rising interest rates and sticky inflation make high-growth, high-valuation tech stocks less appealing. South African investors should note that our major banks—Standard Bank, FirstRand, and Nedbank—offer solid dividend yields and trade on reasonable valuations. Similarly, Sasol’s rebound with energy prices also supports dividend income. While JSE investors can’t buy VYM directly, the shift in USD/ZAR reflects similar forces: a steady rand supports better returns for local income plays. That said, if global interest rates fall sharply or inflation cools faster than expected, growth stocks could surge again, leaving value and dividend strategies behind. For now, income stability matters more than capital gains in a volatile environment. this is just my opinion and not financial advice
Focus on high-yield, dividend-paying South African banks and energy stocks to capture income with some capital buffer. Avoid chasing growth tech counters like Naspers until the rate environment stabilizes.
- Standard Bank
- FirstRand
- Sasol
- USD/ZAR
- Unexpected drop in global interest rates
- Faster-than-expected inflation easing
7/10
The Vanguard High Dividend Yield ETF (VYM) is outperforming the S&P 500 by approximately 3 percentage points year-to-date in 2026, driven by strong performance in energy, industrials, and value stocks rather than tech. With a lower forward P/E ratio of 16 compared to the S&P 500's 23, the ETF is benefiting from a market rotation toward dividend and value stocks, a trend expected to continue due to anticipated higher interest rates and persistent inflation.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: David Dierking
Categories: Macro, Inflation, Rates, Equities, Capital Returns
Tickers: VYM, VOO, VTV
Sentiment: Positive - The ETF is beating the S&P 500 by 3+ percentage points year-to-date with strong diversification across 600+ stocks, a low expense ratio of 0.04%, and strategic exposure to outperforming sectors like energy and industrials. Used as a benchmark comparison point; underperforming relative to VYM but represents the broader market index with no specific positive or negative commentary.
Keywords: dividend stocks, market rotation, value stocks, energy stocks, industrials, ETF performance, interest rates, inflation
Insights:
- VYM: Positive: The ETF is beating the S&P 500 by 3+ percentage points year-to-date with strong diversification across 600+ stocks, a low expense ratio of 0.04%, and strategic exposure to outperforming sectors like energy and industrials.
- VOO: Neutral: Used as a benchmark comparison point; underperforming relative to VYM but represents the broader market index with no specific positive or negative commentary.
- VTV: Positive: Value stocks have beaten the S&P 500 by more than 6 percentage points in 2026, indicating strong outperformance in the value investing category.
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