Forget VYM: BlackRock’s High-Dividend Fund Is Beating It by 9 Points, Yields More, and Charges 0.08%

HDV has outpaced VYM by nearly 9 points year-to-date in 2026 while paying a 3.34% yield versus VYM's 2.20%.

HDV's 75-stock tilt toward energy, healthcare, and staples drives its 2026 edge but can lag equally in growth-led markets.

Taxable investors switching from VYM should redirect new contributions into HDV rather than selling lots with large embedded capital gains.

Two retirees, same $1 million, same 4% rule, buy one finished with $1.4 million, the other hit $0 in 12 years. Our free reader guide explains the flaw that separated them, and the income-first method built to avoid it.

If you own the Vanguard High Dividend Yield ETF ( NYSEARCA:VYM ), you own it for a good reason. VYM tracks the FTSE High Dividend Yield Index, holds roughly 500 above-average payers, and delivers a broad, cheap slice of dividend-paying American stocks. It is one of the most widely held income ETFs on the market, and for buy-and-hold investors who want a diversified basket of yielders without thinking too hard about it, VYM has done its job. But in 2026, VYM is losing ground to a much smaller, more concentrated peer from BlackRock that pays a higher yield and follows a very different rulebook.

Why VYM Investors Should Look Up Right Now

VYM's appeal is breadth. Its top holding, Broadcom, is an 8.03% weight, followed by JPMorgan Chase at 3.34% and Exxon Mobil at 2.72%. Beyond those, weightings drop quickly into a long tail of financials, healthcare, energy, staples, and utilities. That broad exposure explains why VYM tracks the market closely in normal years. It also explains why VYM has struggled to keep up in 2026.

From January 2, 2026 through September 3, 2026, VYM returned 15.29% on a total-return basis. Over the same window, HDV returned 23.85%. That is an 8.56-point gap in roughly eight months — in the same asset class, for a fund with a similar mandate.

The 4% Rule is Broken, Built On A World That No Longer Exists

Every retiree knows about the 4% rule, but it frames retirement as a slow liquidation and still causes retirees with seven-figure accounts to agonize over a dinner out.

There's a different way to run the math that makes more sense today. Build an income floor — dividends, interest, and Social Security that cover your essential bills every month — and you never have to sell shares into a down market just to pay them.

Our free reader guide, The 4% Rule Is Broken , walks through it in about 15 minutes. Access the report here.

Meet HDV, the Alternative Doing the Work

The fund in question is the iShares Core High Dividend ETF ( NYSEARCA:HDV ), BlackRock's screened take on the high-dividend space. HDV tracks the Morningstar Dividend Yield Focus Index, which starts by filtering U.S. companies for wide or narrow economic moats, then screens for financial health using a distance-to-default measure, then ranks the survivors by dividend yield. The result is a roughly 75-stock portfolio, tilted heavily toward energy, healthcare, and consumer staples, with almost none of the mega-cap financial and semiconductor exposure present in VYM's top slots.