Vanguard’s High-Yield VYM ETF – 6 Stocks Driving Its Big Payouts

Investing isn’t easy, and given the current market volatility, retail investors are on edge, worrying about their portfolios. About 20% of the S&P 500 stocks hit a 52-week low before the tariff pause, but they managed to report the biggest single-day gain since 2008. However, if you are worried about the recovery and believe that the tariffs will continue to impact stocks, it is ideal to invest in an exchange-traded fund. 

This will help achieve immediate diversification while ensuring steady returns. Vanguard has some of the best ETFs in the market today and the Vanguard High Dividend Yield ETF (NYSE: VYM) has become a top choice for many. It enjoys a dividend yield of 2.80%. With 529 stocks in its portfolio, this fund is ideal for the long-term investor. Here are 6 stocks driving its big payouts.

Exxon Mobil Corp

In the first quarter of 2025, the S&P 500 reported its worst quarter since 2022 but ExxonMobil (NYSE:XOM) stock managed to generate 10.6% returns during the same period. The oil and gas company has had an excellent run and announced strong numbers in the recent quarter despite the drop in crude oil prices. 

It acquired Pioneer Natural Resources for $60 billion in 2024 and its production in Guyana and Permian Basin hit a record high. In 2024, the company generated $55 billion in cash flow and $35 billion in net income. The management is working on cutting costs and this will help save more in the coming years. 

As crude prices rebound, Exxon Mobil will continue to grow. The company is a dividend aristocrat and has increased the dividend for 42 consecutive years. Considering its history and a 3.8% dividend yield, this stock is a rock-solid investment even in turbulent times. VYM allocates 2.72% of the fund to XOM. 

Abbvie Inc

AbbVie Inc. (NYSE: ABBV) is a pharmaceutical company and a dividend stock that will ensure a steady income for years. A leading drug producer in immunology, Abbvie operates in an industry that will never run out of demand. The company makes new medicines that replace the older ones and is known for the drug, Humira, used for rheumatoid arthritis. 

It reported impressive numbers last year and is expected to continue doing the same. It reported sales of $1.6 billion for Humira and has two products—Rinvoq and Skyrizi—which are expected to generate billions in sales in the coming years. Besides that, it has an impressive drug pipeline, which will help the business grow despite market volatility. 

The company has increased its dividends for 53 consecutive years and enjoys a yield of 3.51%, making it one of the best stocks to own for passive income. VYM allocates 2.01% of the fund to ABBV. 

Chevron Corp

Chevron (NYSE:CVX) is an oil company that managed to beat the market in the first quarter. When the Nasdaq and S&P 500 were down, Chevron jumped 15% in the quarter. It is one of the world’s largest oil and gas producers which is enjoying a rally. The company reported a record high production in 2024 and there is no stopping its momentum. 

It reported a 19% jump in U.S. production and a 7% rise in worldwide production in 2024. This increase was led by growth in the Permian Basin. The management is working on cutting costs which will help see higher free cash flow and could lead to higher dividends. 

The energy sector has been one of the best performing in the first quarter and crude oil prices recovered at the end of March, which led the stock higher. The stock has lost its Q1 gains due to the tariffs and market volatility. However, the company has weathered many ups and downs in the past and it can weather another storm without compromising the dividends. 

Another dividend aristocrat, Chevron has increased dividends for 38 consecutive years and enjoys a yield of 4.77%. VYM allocates 1.49% of the fund in CVX.

Merck & Co Inc

Pharmaceutical company Merck (NYSE:MRK) is considered a defensive stock that can weather market volatility. However, it is down 17% year-to-date and inching closer to the 52-week low of $76. Despite the dip, Merck is in a position to recover the losses in the coming quarters. The best thing about investing in Merck is its solid product portfolio which is heavily diversified. It covers treatments for diabetes, vaccines, infectious diseases, and cardiovascular diseases and also has an animal health segment. 

The company is known for the immunotherapy drug, Keytruda which drives sales quarter after quarter. It saw a 18% jump in sales in 2024. Investors were concerned about Merck after its lower-than-expected fourth-quarter results. While the company managed to beat estimates, its soft guidance and lower sales in China disappointed the market. Goldman Sachs has a buy rating with a target of $103. 

The dividend aristocrat has increased dividends for 25 consecutive years and has a yield of 3.96%. VYM allocates 1.27% of the fund to MRK.

PepsiCo Inc

Vanguard VYM holds 1.15% of the fund in PepsiCo (NASDAQ:PEP). While the stock is down due to the tariff announcement, the dividend yield continues to remain high. The stock pays 3.72% and is a dividend aristocrat. An industry leader, the company has recently suffered from demand headwinds and seen a drop in sales. However, it is expanding the snack category which is a strong revenue generator for the company. 

It is normal for companies to go through ups and downs time and again. Considering the long history of Pepsi Co., it will be able to weather the storm and gain momentum in the coming months. The company has increased dividends for 53 consecutive years which has also helped VYM generate steady returns for investors. Its annualized payment is $5.69 per share and has a strong balance sheet with ample cash and short-term investments. 

AT&T Inc

Telecommunications company AT&T (NYSE:T) has had an excellent start to the year. The stock jumped 58% in the past 12 months and is up 15% year-to-date. A strong dividend payer, it enjoys a yield of 4.19% and VYM allocates 1.07% of the fund in T. The company has gone from being an underperformer to being one of the top stocks in the industry. 

The shares are cheap, the dividend is attractive and there’s a chance of a further upside. For 2024, the company saw a 3.5% year-over-year jump in wireless service revenue and added

 The management has managed to reduce debt and improve cash flow, which offers flexibility in investing towards research and expansion activities.

There is growing confidence in the company’s attractive dividend and the management has reaffirmed its commitment to continue rewarding shareholders in the coming years. 

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