Where do Vanguard dividends go?
If you own stocks through mutual funds or ETFs (exchange-traded funds), the company will pay the dividend to the fund, and it will then be passed on to you through a fund dividend.
Any distributions, dividends or cash interest received after closing will be automatically paid to the nominated linked bank account.
You can view the dividend reinvestment status of the securities in your account online at vanguard.com or in the Holdings section of your regular Vanguard Brokerage statement. Reinvestment transactions will be reported in the Activity section on your regular brokerage statement.
Transfer to a Vanguard® fund.
Use our Directed Dividend Plan to have your dividends and/or capital gains distributions reinvested automatically in shares of another identically registered Vanguard holding.
Dividends typically are credited to a brokerage account or paid in the form of a dividend check. The dividend check is mailed to stockholders but can be direct-deposited to a shareholder's account of choice, if preferred. The alternative to cash dividends is additional shares of stock.
If dividends or capital gains are paid on the date your funds transfer into your brokerage account, they'll be distributed by the method you've chosen, unless you originally elected to have them paid to another Vanguard mutual fund. In that case, they'll be reinvested in the funds that paid them.
What happens to the dividends of the underlying stocks? Dividends received by an ETF are typically reinvested in the Fund.
Most of Vanguard's ETF products pay monthly or quarterly dividends.
Vanguard's distribution reinvestment plan (DRIP) will reinvest Vanguard ETF® cash distributions without charging a commission. Under the plan, distributions are reinvested to buy more units of the same ETF. You pay no commissions and fund distributions stay in the market (unlike cash).
Vanguard S&P 500 ETF (VOO)
VOO has a dividend yield of 1.34% and paid $6.41 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Mar 22, 2024.
Is it better to reinvest dividends or get cash?
Your Money Could Lose Value Due To Inflation: Keeping your cash liquid will result in depreciation over time. Keeping the dividends reinvested instead allows your money to grow with the market over time.
There are typically 4 dividends per year (excluding specials), and the dividend cover is approximately 1.0.
| Dividend ETF | Assets under management | Expense ratio |
|---|---|---|
| Vanguard High Dividend Yield Index ETF (VYM) | $55 billion | 0.06% |
| Vanguard Real Estate ETF (VNQ) | $34 billion | 0.12% |
| iShares International Select Dividend ETF (IDV) | $4.2 billion | 0.51% |
| Global X SuperDividend ETF (SDIV) | $760 million | 0.58% |
Dividends from stocks or funds are taxable income, whether you receive them or reinvest them. Qualified dividends are taxed at lower capital gains rates; unqualified dividends as ordinary income. Putting dividend-paying stocks in tax-advantaged accounts can help you avoid or delay the taxes due.
It is taxed accordingly at your usual rate of income tax, but the 'personal savings allowance' can mean all, or a portion of this, is tax free – there's more information on this from the HMRC website here. For funds with less than 60% in fixed income investments, any income will be classed as dividend.
What Is a Good Dividend Yield? Yields from 2% to 6% are generally considered to be a good dividend yield, but there are plenty of factors to consider when deciding if a stock's yield makes it a good investment. Your own investment goals should also play a big role in deciding what a good dividend yield is for you.
Dividend Summary
There are typically 4 dividends per year (excluding specials), and the dividend cover is approximately 1.0.
| Symbol Symbol | ETF Name ETF Name | Annual Dividend Yield % Annual Dividend Yield % |
|---|---|---|
| VIG | Vanguard Dividend Appreciation ETF | 1.86% |
| VYM | Vanguard High Dividend Yield Index ETF | 2.97% |
| VYMI | Vanguard International High Dividend Yield ETF | 5.04% |
| VIGI | Vanguard International Dividend Appreciation ETF | 2.11% |
Realized capital gains for individual securities are reported to you and to the IRS on Form 1099-B. Realized gains for funds are reported on Form 1099-DIV.
If you own stocks through mutual funds or ETFs (exchange-traded funds), the company will pay the dividend to the fund, and it will then be passed on to you through a fund dividend.
What is the downside of dividend ETF?
Cons. No guarantee of future dividends. Stock price declines may offset yield. Dividends are taxed in the year they are distributed to shareholders.
It's possible to live off the income from high-dividend ETFs, but it may take some planning. You can find high-dividend ETFs by analyzing the ETF selection in your brokerage account.
If in the past, you didn't report some dividend income on your taxes, you are subject to backup withholding and the fund company must withhold 20% of any dividend or capital gains payments.
Any investor transferring money out of a given fund may not transfer money back into that same fund for 30 days. Fund purchases made through payroll contributions, loan payments or rollovers, or by any other means besides an exchange will not fall under this restriction.
Rest easy knowing the cash in your Vanguard Cash Plus bank sweep is eligible for FDIC coverage up to $1.25 million for individual accounts and $2.5 million for joint accounts. You can keep all your money in the bank sweep or diversify into 5 available Vanguard money market funds (each with a $3,000 minimum investment).
