How the iShares Core Dividend Growth ETF and Vanguard’s VYM Compare

DGRO and VYM are two of the most popular dividend ETFs in the US, but they chase different things. VYM, the Vanguard High Dividend Yield ETF, buys the higher-yielding half of the market, while DGRO, the iShares Core Dividend Growth ETF, buys companies that keep raising their dividends.

Over the long run, the growth approach has won. From the start of 2015 to the end of 2025, $10,000 grew to about $33,960 in DGRO and about $29,320 in VYM, and since DGRO’s launch in June 2014 it has returned about 12.7% a year against about 11.0% for VYM.

This guide explains how each fund picks its stocks, what they own, and how their costs, yields and dividend growth compare. It also shows how they performed year by year and over rolling five-year periods, how each behaved in up and down markets, and the year DGRO’s income on an original $10,000 overtook VYM’s, even though VYM pays the higher yield.

Start Here: Learn With FRC

Financial Regulation Courses (FRC) has no stake in which fund you choose. FRC sells no investments and earns no commission, so this comparison focuses on how each fund works and what that means for an investor.

FRC’s ETF Investing for Beginners course explains how dividend ETFs like DGRO and VYM work. ETF Investing Strategies covers dividend growth and income approaches in depth, and Advanced ETF Investing goes further into building a portfolio.

FRC’s programs and memberships are open to everyone. FRC’s year-by-year histories of DGRO and VYM tell each fund’s full story, crash by crash.

DGRO vs VYM at a Glance

Both funds exclude real estate investment trusts and pay dividends quarterly. The key difference is that DGRO screens for dividend growth and safety, while VYM screens only for yield.

A Brief History of Both Funds

VYM launched in November 2006, less than a year before the 2007 market peak. It lost about a third of its value in 2008 and cut its dividend in 2009 and 2010, as banks, which were among its largest holdings, slashed their payouts.

DGRO followed in June 2014 as part of BlackRock’s iShares Core range of low-cost funds. It was built around dividend growth and dividend sustainability, with a payout ratio screen designed to avoid companies stretching to pay more than they can afford.

VYM is the larger fund, with about $83 billion in assets against DGRO’s $45 billion. In February 2026, Vanguard cut VYM’s expense ratio from 0.06% to 0.04%.

How DGRO Picks Its Stocks

DGRO tracks the Morningstar US Dividend Growth Index. A company qualifies if it has raised its dividend for at least five years without interruption.

Two screens then remove riskier payers. A company’s dividend must be less than 75% of its expected earnings, and the highest-yielding 10% of eligible stocks are excluded.

The remaining companies are weighted by the total dollars of dividends they pay, with caps on any single holding. The index is rebuilt every December.

How VYM Picks Its Stocks

VYM tracks the FTSE High Dividend Yield Index. It ranks US companies by their expected dividend yield over the next 12 months and includes the higher-yielding half of the market by total value.

There is no requirement for a history of dividend growth, no payout ratio screen and no profitability test. A company qualifies simply by paying an above-average yield.

Holdings are weighted by company size with no cap on individual stocks. That is why Broadcom, a chipmaker that pays a sizable dividend and whose shares have soared, makes up about 6.9% of the fund.

The Key Differences in Plain Terms

DGRO asks whether a company keeps raising its dividend and can afford to. VYM asks only whether the company’s yield is above average today.

That difference shapes everything else. DGRO tends to hold growing, financially comfortable companies, while VYM holds more mature, slower-growing companies with bigger payouts, including more banks and energy producers.

The weighting differs too. DGRO gives the biggest weights to the companies paying the most cash, while VYM gives them to the largest companies by size, with no cap.

What DGRO Owns

At the end of September 2026, DGRO’s top 10 holdings were Microsoft, Apple, ExxonMobil, AbbVie, Johnson & Johnson, JPMorgan Chase, Broadcom, Procter & Gamble, Philip Morris and Home Depot. Together they made up about 27% of the fund, with no single company above about 3.2%.

What VYM Owns

At the end of September 2026, VYM’s top 10 holdings were Broadcom, JPMorgan Chase, ExxonMobil, Johnson & Johnson, AbbVie, Cisco, Chevron, Caterpillar, Merck and Bank of America. Together they made up about 26% of the fund, with Broadcom alone close to 7%.

Microsoft and Apple, DGRO’s two largest holdings, are not among VYM’s top holdings because their yields are too low to rank highly. VYM holds more banks and energy producers instead.

Sector Weights Side by Side

The biggest differences are in healthcare and consumer staples, where DGRO holds more, and energy, where VYM holds much more. Technology looks similar, but it means different companies: Microsoft and Apple in DGRO, and mainly Broadcom and Cisco in VYM.

How Much They Overlap

The two funds share several large names, including Broadcom, JPMorgan Chase, ExxonMobil, Johnson & Johnson, AbbVie and Merck. The five companies that appear in both funds’ top 10 alone account for an overlap of about 13% by weight. But each fund’s largest positions are different, and VYM holds about 200 more companies than DGRO.

That partial overlap explains why their results have often been far apart. In 2020, the gap between them was more than eight percentage points, and in 2022 it was more than seven.

The Cost

VYM charges an expense ratio of 0.04%, half DGRO’s 0.08%. On a $100,000 investment, that is $40 a year for VYM and $80 for DGRO.

As an illustration, if both funds earned the same 8% a year before costs, $100,000 would grow to about $995,100 in 30 years at VYM’s fee and about $984,100 at DGRO’s. So far, though, DGRO’s stronger returns have far outweighed that small cost difference.

Dividend Yield

VYM’s recent yield of about 2.2% is higher than DGRO’s of about 1.9%. On a $10,000 investment, that is roughly $220 a year from VYM, against about $190 from DGRO.

The gap is smaller than many investors expect. VYM’s yield has been pulled down by its large stake in Broadcom, whose share price has risen much faster than its dividend.

Dividend Growth

This is where the two funds differ most. From 2015 to 2025, DGRO’s dividend per share grew about 8.4% a year, while VYM’s grew about 5.0% a year.

DGRO grew its payout faster over every period, and the gap has widened recently. VYM’s dividend was almost flat in 2024 and 2025, while DGRO kept raising its payout by around 5% a year.

DGRO has never cut its annual dividend. VYM cut its payout in 2009 and 2010 after the financial crisis, before DGRO existed, and has raised it every year since, though only slightly in the last two years.

Performance Year by Year

All figures are total returns with dividends reinvested. Over 11 full calendar years, DGRO led in seven and VYM in four, and the gaps were often large, averaging about 3.6 percentage points a year.

Over the 10 calendar years from 2016 to 2025, DGRO returned about 13.1% a year against VYM’s 11.3%. Over the five years from 2021 to 2025, VYM was ahead, at about 12.7% a year against DGRO’s 11.7%, helped by its strong 2022.

The Scorecard: 2015 to 2025

Over the same period, the S&P 500 turned $10,000 into about $39,950. Both funds trailed it, but DGRO by much less.

Rolling Returns

DGRO led in six of the seven five-year periods and in seven of the nine three-year periods. Unlike some fund pairs, where the winner depends on the dates chosen, DGRO’s lead over VYM has been consistent across most holding periods.

The one exception, 2021 to 2025, shows when VYM shines. That period included 2022, when rising interest rates hit growth stocks and VYM’s banks and energy companies held up far better.

How Each Fund Behaved in Up and Down Markets

This table shows the trade-off between the two funds. VYM has held up better in the market’s down years, losing only about a quarter as much as the S&P 500, while DGRO has captured more of the gains in strong years.

Because strong years have been far more common than down years since 2015, DGRO’s extra upside has added up to the larger long-term return.

Which Fund Led in Which Kind of Market

When steady growth companies lead, DGRO tends to come out ahead. When value, energy or banks lead, or when Broadcom surges, VYM usually does.

If You Had Taken the Dividends as Cash

The table below shows what $10,000 invested in each fund at the start of 2015 would have paid out in cash each year, with no dividends reinvested.

This table shows something most comparisons miss. VYM paid more cash every year from 2015 to 2023, but DGRO’s faster dividend growth closed the gap, and in 2024 the DGRO investor’s income overtook the VYM investor’s for the first time. Many investors know that faster dividend growth eventually catches up with a higher starting yield; here it took nine years.

By 2025, the DGRO investor was earning about 5.5% a year on the original $10,000, against about 5.1% for VYM. Over the full 11 years, VYM still paid more in total, about $4,650 against $4,210, because of its head start.

The share prices made the bigger difference. By the end of 2025, the DGRO shares were worth about $26,170 and the VYM shares about $20,880, so the DGRO investor finished well ahead, at about $30,380 against $25,530, counting both the shares and the cash collected.

Bear Markets and Crashes

In the 2020 COVID crash, both funds fell about 35% on price. The recovery was very different: DGRO regained its peak by mid-November 2020, while VYM took until January 2021, and VYM finished the year up only about 1.1% against DGRO’s 9.5%.

In the 2022 bear market, VYM was the clear winner. It lost only about 0.4% for the year against DGRO’s 7.9%, as its banks and energy companies benefited from rising interest rates and oil prices.

In late 2018, DGRO held up better, losing about 2.4% for the year against VYM’s 5.9%. VYM’s energy and financial holdings were hit by falling oil prices and fears of slowing growth.

Volatility and Risk

The two funds have been about equally volatile. DGRO was slightly steadier over one and three years, while VYM’s smaller fall over five years reflects how well it held up in 2022. FRC’s guide to growth stocks vs value stocks explains why different styles lead in different markets.

Common Questions About DGRO and VYM

Which has performed better? DGRO, over most periods. Since June 2014, it has returned about 12.7% a year against about 11.0% for VYM, and it led in six of the seven rolling five-year periods from 2015 to 2025.

Which pays more income? VYM pays a higher yield today, about 2.2% against 1.9%. But DGRO’s faster dividend growth means that, for an investor who bought in 2015, DGRO’s income overtook VYM’s in 2024.

How much would you need in VYM or DGRO to make $1,000 a month? At recent yields, about $545,000 in VYM or about $632,000 in DGRO would produce around $12,000 a year in dividends. Yields change over time, and DGRO’s faster dividend growth means its income from the same investment has historically risen more quickly.

Is VYM a good dividend fund? It has a long record as a low-cost source of above-average income, with about 600 holdings and a history back to 2006. Its weaknesses are slower dividend growth, two dividend cuts after the financial crisis and weaker returns than DGRO in most periods since 2015. FRC’s VYM performance history covers every year in detail.

What is VYM’s 10-year return? Over the 10 calendar years from 2016 to 2025, VYM returned about 11.3% a year with dividends reinvested, against about 13.1% for DGRO. Over the 10 years to early November 2026, the figures were about 12.2% and 14.3%.

Which has grown its dividend faster? DGRO, by a wide margin, at about 8.4% a year from 2015 to 2025 against about 5.0% for VYM.

Which is cheaper? VYM, at 0.04% a year against DGRO’s 0.08%.

Which holds up better in a crash? It depends on the crash. VYM held up far better in 2022, when interest rates rose, while DGRO did better in 2018 and recovered much faster in 2020.

Is there any point holding both? Some investors do. A 50/50 split from 2015 to 2025 would have grown $10,000 to about $31,640, with a worst year of only about −4.2%, smaller than either fund’s worst year on its own.

How Each Fund Is Taxed

Both funds exclude REITs, and most of their dividends have been qualified dividends, taxed at the lower long-term capital gains rates. Both have rarely distributed capital gains, as is typical for index ETFs.

VYM’s higher yield produces slightly more taxable income each year in a regular brokerage account. FRC’s guides to qualified vs non-qualified dividends and how to choose tax-efficient ETFs explain how dividend income is taxed.

Which Investors Each Fund Tends to Suit

VYM tends to appeal to investors who want higher income today, the lowest cost, broad diversification across about 600 companies and stronger protection in downturns driven by rising interest rates. Its long history since 2006 includes the full financial crisis.

DGRO tends to appeal to investors with a longer time horizon who want their income to grow, along with stronger total returns. Its payout ratio screen and growth requirement add checks that VYM does not have.

The choice usually comes down to time. An investor who needs maximum income in the next few years may lean towards VYM, while one who can wait has historically been rewarded by DGRO’s faster-growing income.

How They Compare With Other Dividend ETFs

DGRO and VYM are two of the four most popular US dividend ETFs, alongside SCHD and VIG. FRC’s comparisons of DGRO vs SCHD, DGRO vs VIG, SCHD vs VYM and VYM vs VIG cover the other pairings.

Against the S&P 500, both funds have trailed over most long periods. FRC’s VOO performance history shows how the broad market performed over the same years.

Is Your Money Safe in DGRO and VYM?

Both funds are regulated investment companies overseen by the SEC, with their holdings kept by independent custodians and separate from BlackRock’s and Vanguard’s own assets. FRC’s guide to Is Vanguard Safe? explains how Vanguard is structured and regulated.

When you hold either fund at a SIPC member brokerage, your account is protected up to $500,000, including $250,000 in cash, if the brokerage fails and assets are missing. This protection does not cover market losses, such as the falls of about a third both funds suffered in 2020.

Keep Learning

The FRC dictionary is more than a dictionary. It is a library of explainer videos, written explanations and on-page quizzes, so you can open any term, such as ex-dividend or diversification, and go deeper whenever something is unclear.

FRC’s Investing for Beginners guide and its guide to dollar-cost averaging vs lump sum are natural next steps for anyone building a dividend portfolio.

The Bottom Line

DGRO has beaten VYM over most periods since 2014, with faster dividend growth, stronger returns in rising markets and an income stream that overtook VYM’s for long-term holders. VYM offers a higher yield today, a lower cost and better protection when interest rates rise, as 2022 showed.

VYM tends to fit investors who need more income now, and DGRO those who can wait for their income to grow. Their history suggests that patience has usually been rewarded.