VYMI: Why This International ETF Might Keep Beating American Stocks
For most of the past 17 years (since the global financial crisis and related Great Recession), U.S. stocks as a whole have outperformed the rest of the world. America’s world-leading tech stocks of the Nasdaq-100 index were the place for investors to be.
But just within the past year, that “American exceptionalism” stock market narrative has shifted. Non-U.S. stocks are outperforming America. The Vanguard Total International Stock ETF (VXUS 0.94%), a popular index fund that holds more than 8,000 global stocks, is up about 25% in the past year — outperforming the S&P 500 index and nearly matching the Nasdaq-100.
Another popular international stock ETF has done even better than VXUS. It’s called the Vanguard International High Dividend Yield ETF (VYMI 0.90%). In the past year, it delivered total returns of 45.5% and average annual returns of 11.8% for the past 10 years.
Here are a few reasons why the VYMI might keep beating U.S. stocks.
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VYMI: Thousands of global stocks paying high dividends
The Vanguard International High Dividend Yield ETF is broadly diversified, holding 1,535 international stocks. The fund owns a wide range of the global economy, including stocks from Europe (43.6% of the fund’s holdings), the Pacific (26.4%), and emerging markets (21.1%).
The VYMI has a special focus on investing in stocks of international companies that are expected to deliver higher-than-average dividends. The fund’s dividend yield of 3.3% is 3 times the 1.1% dividend yield of the S&P 500 index.
Vanguard International High Dividend Yield ETF
Today’s Change
(-0.90%) $-0.84
Current Price
$93.06
Key Data Points
Day’s Range
$92.91 – $94.59
52wk Range
$65.08 – $101.71
Volume
1.7M
Why the VYMI could beat American stocks again
One reason why international stocks have been outperforming American stocks recently is that investors are worried about artificial intelligence (AI) stocks and are looking for opportunities in other parts of the market. Vanguard’s 2026 economic and market outlook forecast non-U.S. stocks to outperform U.S. stocks during the next 10 years.
The Vanguard International High Dividend ETF is in line with this trend toward international stocks and value stocks. It lets you own more than 1,500 companies, and most of them are not major tech names or AI stocks. The top 10 holdings include Swiss pharmaceutical stocks; international bank stocks from Canada, the United Kingdom, Australia, and Spain; Shell PLC (a major international oil stock); and household name brands like Toyota and Nestlé.
What could stop the VYMI from beating U.S. stocks in 2026? This ETF’s biggest near-term risk might be the Iran war. Ever since the Iran war started on Feb. 28, skyrocketing oil prices have driven down share prices of international stocks. The VYMI is trading down more than 6% since the war began.
If the Iran war lasts longer than expected and the global economy gets hit by higher oil prices and lingering uncertainty, that could be bad for the VYMI. But if the Iran war ends soon, and oil shipments from the Middle East resume, the VYMI might recover quickly. This fund could be a good buy for long-term investors.
Ben Gran has positions in Vanguard Total International Stock ETF. The Motley Fool has positions in and recommends Vanguard Total International Stock ETF. The Motley Fool recommends Nestlé. The Motley Fool has a disclosure policy.
