Core Insights - The Vanguard Energy ETF has outperformed other ETFs, achieving a 30.2% annual return over the last five years, significantly higher than the Vanguard Financials ETF's 20% [4][6] - The ETF's performance is attributed to the recovery of the global economy post-COVID-19, which increased oil demand, although it has been relatively flat over the last three years compared to the S&P 500's 80% gain [6][9] - The ETF is heavily weighted in major companies like ExxonMobil and Chevron, which have low production costs and strong dividend histories, making it an attractive option for passive income [12][15] Performance Context - The Vanguard Energy ETF's impressive returns are contextualized by the low oil prices during the pandemic, which drove significant gains as the economy recovered [5][6] - Current forecasts predict Brent crude oil prices to be around $52 per barrel in 2026, which could pressure margins for oil companies [9][11] - The ETF's performance is influenced by external factors such as geopolitical events and shifts in investor preferences towards dividend and value stocks [10][17] Investment Characteristics - The Vanguard Energy ETF has a low expense ratio of 0.09%, making it a cost-effective way to invest in leading U.S. energy companies [16] - The ETF yields 3.1%, driven by high yields from its largest holdings, which is significantly higher than the S&P 500 average of 1.2% [15][16] - The ETF's price-to-earnings ratio of 16.9 is more attractive compared to the Vanguard S&P 500 ETF's 28.9, appealing to investors concerned about valuations [18]

Core Insights - The article emphasizes the potential of high-yield ETFs for generating passive income, especially in a market where stock prices are at all-time highs [1][2]. Group 1: Vanguard High Dividend Yield ETF - The Vanguard High Dividend Yield ETF (VYM) focuses on value and income-oriented sectors such as financials, consumer staples, utilities, and energy, while also including growth stocks like Broadcom [4]. - Broadcom is highlighted as a top holding due to its strong commitment to dividends, having increased its payout for 15 consecutive years [5]. - The ETF prioritizes dividend quality over yield, featuring companies like Walmart, which has a long history of raising its payouts [6]. - With a 0.06% expense ratio and a yield of 2.5%, VYM offers a better passive income option compared to the S&P 500's 1.2% yield [7]. Group 2: Vanguard Energy ETF - The Vanguard Energy ETF (VDE) mirrors the energy sector's performance and invests in over 100 energy stocks, achieving a yield of 3.1% [9][10]. - A significant portion of the fund (39%) is invested in ExxonMobil and Chevron, both of which have a long history of increasing dividends [10]. - The fund has a low expense ratio of 0.09% [11]. Group 3: Schwab U.S. Dividend Equity ETF - The Schwab U.S. Dividend Equity ETF (SCHD) is more yield-focused, with over half of its holdings in energy, consumer staples, and healthcare sectors, offering a yield of 3.7% [12]. - It features a low expense ratio of 0.06% [13]. Group 4: JPMorgan Equity Premium ETFs - The JPMorgan Equity Premium ETFs (JEPI and JEPQ) utilize covered calls and equity-linked notes to generate income, with yields of 8.4% and 11.1% respectively [14][16]. - These ETFs are designed for investors seeking passive income that exceeds bond returns, albeit with capped upside potential [15][17]. - Both funds have higher expense ratios of 0.35% due to active management, and they provide monthly distributions [17].