MSTY vs. VYM: Insane Monthly Yields or Blue-Chip Dividend Power?

Today, we’re sizing up two amazing funds in a head-to-head competition. One is an exchange traded fund (ETF) called the YieldMax MSTR Option Income Strategy ETF (NYSEARCA:MSTY), which derives substantial income from Microstrategy (NASDAQ:MSTR) stock.

The other is the Vanguard High Dividend Yield ETF (NYSEARCA:VYM), which provides ample dividends and share-price stability. So, it’s a choice between insanely high monthly cash distributions with MSTY or stable blue-chip dividend power with VYM.

Or maybe you can own both of these funds if you have a plan in place. By combining big yield with safety-first measures, investors can maximize their income potential without jeopardizing their financial well-being.

MSTY: Stunning Yield, Monthly Payouts

It’s easy to see why the YieldMax MSTR Option Income Strategy ETF garners so much attention. First of all, the fund is centered around MSTR stock, and Microstrategy is a famous technology company that invests in Bitcoin (CRYPTO:BTC).

How much Bitcoin? As of March 31, 2025, Microstrategy held 528,185 Bitcoins and reported a digital asset carrying value totaling $43,546,079. That’s a whole lot of cryptocurrency, and if the Bitcoin price goes up, MSTR stock and the MSTY ETF will also probably move higher.

So, the YieldMax MSTR Option Income Strategy ETF is associated with a well-known company (Microstrategy) and the world’s most famous cryptocurrency (Bitcoin). Yet, there’s another reason why investors are flocking to MSTY in droves.

Specifically, the YieldMax MSTR Option Income Strategy ETF offers an annual distribution rate (which is similar to a forward annual dividend yield) of 88.8%. Not only that, but the fund pays out its distributions on a monthly basis, so you wouldn’t have to wait several months to start getting the cash payments.

Issues to Consider With MSTY

The fund’s benefits might make the YieldMax MSTR Option Income Strategy ETF hard to resist. On the other hand, there are issues with the MSTY ETF that prospective investors ought to weigh carefully.

To start off, the YieldMax MSTR Option Income Strategy ETF automatically deducts 0.99% worth of annualized operating expenses from the share price. Never forget that annual fees can diminish your profits and deepen your losses over time.

Next, there are risks associated with the options-trading strategies that the YieldMax MSTR Option Income Strategy ETF uses. Along with holding U.S. Treasury bonds, the MSTY ETF indirectly participates in Microstrategy stock ownership though synthetic option strategies.

Then, the YieldMax MSTR Option Income Strategy ETF writes (sells) covered calls to generate income. This enables MSTY to provide nearly 89% annual yield before expenses.

However, this covered call strategy also limits MSTY’s share-price upside potential when Microstrategy stock goes higher. As a result, in terms of share-price performance, the YieldMax MSTR Option Income Strategy ETF could end up doing much worse than Microstrategy stock.

VYM: Solid Yield and Blue-Chip Benefits

So far, we’ve discovered that the MSTY ETF could put large monthly payouts in your portfolio. Yet, the YieldMax MSTR Option Income Strategy ETF could seriously underperform Microstrategy stock and the fund’s current yield isn’t guaranteed for the future.

One way to avoid these issues is to stick to a safer, more stable fund like the Vanguard High Dividend Yield ETF. Instead of using options-trading strategies for just one stock, the VYM ETF focuses on a wide range of highly established blue-chip stocks across multiple market sectors.

The Vanguard High Dividend Yield ETF’s basket of stocks includes retail giant Walmart (NYSE:WMT), energy mammoth Exxon Mobil (NYSE:XOM), home improvement behemoth Home Depot (NYSE:HD), financial-sector leader JPMorgan Chase (NYSE:JPM), and technology titan Broadcom (NASDAQ:AVGO). In total, the VYM ETF’s diversified portfolio comprises 585 stocks.

Maybe the Vanguard High Dividend Yield ETF doesn’t capture the excitement of a Bitcoin-associated fund like MSTY. Nevertheless, VYM’s long-term investors should be quite pleased with the fund’s share-price appreciation.

Low Fees, Respectable Yield

There are other advantages, as well, such as the Vanguard High Dividend Yield ETF’s ultra-low expense ratio (i.e., annual management fees) of 0.06%. This compares favorably to the YieldMax MSTR Option Income Strategy ETF, which deducts operating expenses of 0.99% per year.

Next, investors should take note of the VYM ETF’s forward annual dividend yield, which is 2.63%. Granted, this isn’t headline-grabbing like the nearly 89% annual distribution rate that the YieldMax MSTR Option Income Strategy ETF currently features.

Still, the Vanguard High Dividend Yield ETF offers greater stability, reasonable fees, and a relative sense of safety. Besides, a 2.63% yield is perfectly respectable, so let’s maintain a reasonable perspective and not be too greedy.

Get the Best of Both Worlds

After discussing these two intriguing funds, it might seem like you have to choose between fabulously high yield or diversified blue-chip stability. In reality, however, it’s possible to get the best of both worlds.

Since the YieldMax MSTR Option Income Strategy ETF is comparatively high-risk, you could buy just a few shares for extra high-yield portfolio power. After that, you can buy some shares of the Vanguard High Dividend Yield ETF as a portfolio anchor that gets decent yield.

In the end, you’ll get exposure to plenty of established blue-chip names with VYM and a Bitcoin-based yield boost with MSTY. If implemented carefully, this strategy may be your best bet for passive income in 2025’s second half.

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