1 Dividend ETF That Could Turn $500 Monthly Into a $725,000 Portfolio That Pays $21,750 Annually
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By Stefon Walters – Mar 20, 2026 at 1:45AM ESTKey PointsThe Vanguard High Dividend Yield ETF consists of companies with a history of paying above-average dividends.VYM has averaged around 11.4% annual total returns and a 3% dividend yield over the past decade.VYM is more diversified than many other popular dividend ETFs.How does this sound: an investment valued at $725,000 and providing $21,750 annually in passive income? Pretty good, I'd say. How about accomplishing that with as little as $500 invested per month? Even better, I'd assume. Well, there's a dividend exchange-traded fund (ETF) that has shown it can make it happen if it continues on its recent trajectory: Vanguard High Dividend Yield ETF (VYM +0.00%). Nothing is guaranteed in the stock market, but VYM is led by high-quality companies that have stood the test of time and have shown to be reliable dividend payers. With a little patience, VYM could be a productive piece of your portfolio. Image source: Getty Images. A dividend ETF that covers a lot of ground VYM's name says it all: a dividend ETF focused on high-yield stocks. To be included in VYM, a company must have a history of paying above-average dividends. Because of its rather loose criteria, VYM is more well-rounded sector-wise compared to other popular dividend ETFs. Financials: 19.4% Industrials: 13.8% Healthcare: 12.9% Technology: 12.3% Consumer Discretionary: 10.1% Energy: 9.6% Consumer Staples: 9.4% Utilities: 6.5% Telecommunications: 3.7% Basic Materials: 2.3% In these sectors, there are plenty of industry leaders that have been paying and growing their dividends for a while, too. VYM's top five holdings are Broadcom, JPMorgan Chase, ExxonMobil, Johnson & Johnson, and Walmart. All of them being from different sectors is another testament to VYM's diversification. With 559 stocks under its belt, VYM covers a lot of ground, ensuring you get exposure to a wide variety of industries and growth opportunities. ExpandNYSEMKT: VYMVanguard High Dividend Yield ETFToday's Change(0.00%) $0.00Current Price$147.51Key Data PointsDay's Range$146.60 - $148.3752wk Range$112.05 - $157.29Volume1.8M Performance that should make you optimistic for the future Over the past decade, VYM has averaged just over 11.4% annual total returns. Past results don't guarantee future performance, but for the sake of illustration, let's assume it continues to average this over the long term. Here is roughly how much $500 monthly investments would grow to over the years: Years InvestedInvestment ValueAnnual Dividend Payout10$102,080$3,06215$212,460$6,37320$401,490$12,04425$725,220$21,756 Table by author. Investment values are rounded down to the nearest 10 and account for VYM's 0.04% expense ratio. VYM's average dividend yield in the past decade is also around 3%. If it were to maintain that average with the above investment values, the annual payout would top $21,000 at the 25-year mark. I'm aware that there are many assumptions in this example, but the larger point is that consistency and compound earnings can work together to grow wealth and put you in a great position to have a dependable income source years down the road.Read NextMar 13, 2026 •By Daniel FoelberThe Largest Stock Holding in the Vanguard High Dividend Yield ETF Just Delivered Blowout Earnings. Here's Why the ETF Is Crushing the S&P 500 in 2026 and Worth Buying in March.Mar 12, 2026 •By Sara AppinoVYM Plays It Broad and Safe, FDVV Adds Tech Titans Like Nvidia to the Dividend MixMar 12, 2026 •By Jake LerchIncome-Oriented ETFs: VYM Offers Greater Diversification, While HDV Boasts a Higher YieldMar 10, 2026 •By David Jagielski, CPAThe High-Yielding Vanguard ETF That Belongs in Every Investor's PortfolioMar 7, 2026 •By Jake Lerch3 Vanguard ETFs to Buy and Hold Forever for $30,000 in Annual Dividend IncomeMar 4, 2026 •By Matt Frankel, CFP2 Top Defensive ETFs That Prioritize Stability Over ExcitementAbout the AuthorStefon Walters is a contributing Motley Fool stock market analyst covering publicly traded companies across technology, consumer goods, and financials, as well as retirement planning. Stefon is a published author and has more than a decade of experience teaching financial literacy. He holds a bachelor’s degree in economics from the University of North Carolina at Chapel Hill.TMFStefonWStocks MentionedVanguard High Dividend Yield ETFNYSEMKT: VYM$147.51(0.00%)+$0.00WalmartNASDAQ: WMT$121.09(-0.73%)-$0.89JPMorgan ChaseNYSE: JPM$287.97(+0.08%)+$0.23ExxonMobilNYSE: XOM$158.22(+0.40%)+$0.63Johnson & JohnsonNYSE: JNJ$237.60(+0.14%)+$0.32BroadcomNASDAQ: AVGO$320.45(+1.43%)+$4.52*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.