VYM vs DGRO: Which Dividend ETF Should You Buy in 2025?

Passive investors looking for an opportunity to get more bang for their buck amid the Trump tariff turbulence may wish to start putting money to work. Indeed, there’s no guarantee that we’ve hit bottom, even after Trump’s 90-day pause on most reciprocal tariffs and temporary exemptions on various goods, including various electronics and auto parts. If Trump can hit the pause button or the off switch, you can bet he’s also capable of hitting the on button again. In any case, recent Trump reprieves may be enough to lessen the economic blow as the U.S. economy hopes to avoid a recession, which basically has a 50/50 chance at this point.

Why panic-selling as the market searches for a bottom from the “Trump correction” is such a bad idea

At such a market crossroads, stocks could go either way in a violent fashion. Whether it’s a face-melting rally or a meltdown we’ll be in for, it all depends on Trump’s mood as he looks to move forward with what some would refer to as a high-stakes gamble. With Trump recently backing down from some tariffs, I think a bull-case scenario exists whereby a deal can be struck before the cut of tariffs has a chance to slice too deep.

Perhaps it’s the tariff threats and not necessarily following through on tariffs that could help land Trump a deal he seeks. Whether it’ll be worth the lost rapport, though, remains the multi-trillion-dollar question. Either way, the weaker greenback and potential room for faster rate cuts likely to result may very well be a massive win for Trump.

Though markets will be tough to time, I think staying the course with the following top-tier ETFs is a wise move. They won’t put you in the blast zone of the tariff-induced bear market (that’d be the Nasdaq 100) and may provide a smoother, more bountiful ride relative to the S&P 500 as volatility stays in the driver’s seat.

Vanguard High Dividend Yield Index Fund ETF

Vanguard High Dividend Yield Index Fund ETF (NYSEARCA:VYM) has fallen a bit less than the S&P 500 this year, now down just over 9% from its February 2025 peak. With a 2.9% yield and one of the lowest expense ratios around (to be expected from a Vanguard ETF), and a lower beta of 0.78, I think the VYM makes for a relatively comfortable buy on this latest dip.

Of course, the VYM isn’t going to side-step any tariff escalations. Either way, it’s hard to imagine Trump will keep adding to the punitive tariffs on China, which, I believe, has already approached the upper limit at 145%. That pretty much makes most trade between the U.S. and China no longer economical.

What else is there to like about the VYM?

A lot of its holdings are quite insulated from tariffs. Indeed, high-yielding consumer staples, healthcare plays, and utilities provide extra income without extra volatility.

iShares Core Dividend Growth ETF

iShares Core Dividend Growth ETF (NYSEARCA:DGRO) has followed a similar trajectory to the VYM. Like the VYM, it’s a low-cost ETF that has outperformed the S&P 500 amid the Trump correction due to a diversified mix of top-tier dividend growers. With more of an emphasis on dividend growth than upfront yield (DGRO’s yield is 2.24%, a good amount less than that of the VYM), I view DGRO as having more to gain in a scenario that sees Trump keep backing down from tariffs.

With a four-star rating from Morningstar and more exposure to growthier names — think tech stocks like Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) — I’d favor DGRO over VYM for younger, growth-minded investors who seek the perfect balance between yield, low volatility (0.81 beta, which is a hair higher than the VYM) and appreciation.

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