Core Viewpoint - The Schwab U.S. Dividend Equity ETF (SCHD) has seen a significant increase of 14.7% in value early in the year, outperforming the S&P 500, which only rose by 1.3% [1] Investment Characteristics - The ETF offers a high yield of 3.5%, which was over 4% at certain points last year, and has a low expense ratio of 0.06%, equating to $6 for every $10,000 invested [2] - It is unique in being 100% invested in stocks, focusing on sectors with industry-leading companies that prioritize returning capital to shareholders through dividends [3] Sector Allocation - A substantial 54.6% of the ETF is allocated to the energy, consumer staples, and healthcare sectors, compared to only 17.6% in the S&P 500 [4] - The energy sector constitutes 19.9% of the ETF and has been outperforming the S&P 500 in 2026, while technology and communications sectors have faced minor sell-offs [6] Diversification and Holdings - The ETF is heavily concentrated in large-cap stocks, with approximately 90% of its investments in companies with market caps of at least $15 billion, ensuring a well-balanced portfolio across industry leaders [7]

Core Insights - The Vanguard High Dividend Yield ETF (VYM) offers lower costs, slightly higher yield, and larger assets under management compared to the ProShares - S&P 500 Dividend Aristocrats ETF (NOBL) [1][4] - VYM targets high-yielding companies broadly, while NOBL focuses on S&P 500 stocks with a minimum of 25 consecutive years of dividend increases [2] Cost & Size Comparison - VYM has an expense ratio of 0.04%, significantly lower than NOBL's 0.35% [3][4] - As of February 4, 2026, VYM's one-year return is 15.6%, compared to NOBL's 11.2% [3] - VYM offers a dividend yield of 2.3%, while NOBL provides a yield of 2.0% [3][4] - VYM has assets under management (AUM) of $75.0 billion, compared to NOBL's $11.9 billion [3] Performance & Risk Comparison - Over the past five years, VYM experienced a maximum drawdown of 15.83%, while NOBL had a drawdown of 17.92% [5] - An investment of $1,000 in VYM would have grown to $1,616 over five years, compared to $1,396 for NOBL [5] Portfolio Composition - NOBL consists of 70 S&P 500 Dividend Aristocrats, with sector weights emphasizing Industrials (24%), Consumer Defensive (21%), and Financial Services (13%) [6] - The largest positions in NOBL include Amcor Plc, Pepsico Inc, and Ww Grainger Inc, each under 2% of assets, reflecting an equally weighted approach [6] - VYM holds a broader portfolio of 589 high-yielding U.S. stocks, with top sectors being Financial Services (21%), Technology (18%), and Healthcare (13%) [7] - Major holdings in VYM include Broadcom Inc, JPMorgan Chase & Co, and Exxon Mobil Corp, indicating a less concentrated portfolio [7] Implications for Investors - Both VYM and NOBL are viable options for investors interested in dividend stocks, each with distinct characteristics [8]

Core Insights - Vanguard and Fidelity are major players in the investment sector, managing trillions of dollars in assets and serving as key investment options for various financial objectives [1] Group 1: Dividend ETFs Overview - Both Vanguard and Fidelity provide quality exchange-traded funds (ETFs) focused on income generation, although they offer a limited selection of dividend ETFs [2] - Vanguard's Dividend Appreciation ETF (VIG) targets companies with at least 10 years of consecutive annual dividend growth, excluding the top 25% of yields [4] - The Vanguard International Dividend Appreciation ETF (VIGI) requires a seven-year track record of annual dividend growth, differing from its U.S. counterpart [4] - Vanguard's High Dividend Yield ETF (VYM) selects the top half of U.S. dividend-paying stocks based on yield [5] - The Vanguard Wellington Dividend Growth Active ETF (VDIG) is actively managed and focuses on high-quality companies with a history of dividend growth [6] - Fidelity's High Dividend ETF (FDVV) emphasizes yield while also considering dividend growth rate and payout ratio, adding a multi-factor approach [7] - Fidelity's Dividend ETF for Rising Rates (FDRR) evaluates stocks based on their correlation to 10-year Treasury yields, in addition to yield and growth factors [8]

Core Insights - Vanguard High Dividend Yield ETF (VYM) and Schwab U.S. Dividend Equity ETF (SCHD) are both designed for dividend-focused investors, with VYM having a lower expense ratio and SCHD offering a higher yield and concentrated portfolio [1][2] Cost & Size Comparison - Both VYM and SCHD have an expense ratio of 0.06%, but VYM is slightly more affordable with a 0.04% expense ratio [3][4] - As of February 9, 2026, VYM has a 1-year return of 20.77% and a dividend yield of 2.33%, while SCHD has a 1-year return of 18.20% and a dividend yield of 3.51% [3][4] Performance & Risk Analysis - Over a 5-year period, VYM has a maximum drawdown of 15.83% compared to SCHD's 16.86% [5] - An investment of $1,000 would grow to $1,616 in VYM and $1,409 in SCHD over the same period [5] Portfolio Composition - SCHD holds 101 stocks with significant allocations in energy (19%), consumer defensive (18%), and healthcare (18%), featuring major positions in companies like Lockheed Martin, Texas Instruments, and Chevron [6] - VYM has a broader diversification with 589 holdings, focusing on financial services (21%), technology (18%), and healthcare (13%), with top holdings including Broadcom, JPMorgan Chase, and Exxon Mobil [7] Investor Considerations - Dividend investors prioritize consistent payouts, especially during market volatility, making the choice between VYM and SCHD significant based on individual investment strategies [8]

Group 1 - Vanguard has established a strong reputation on Wall Street due to its conservatively managed business model and low-cost investment products [1] - The company is the second-largest ETF issuer globally, managing over $4 trillion in assets, and is on track to potentially surpass BlackRock in the next year or two [1] - Vanguard offers more than 100 ETFs, most with expense ratios of 0.1% or less, but not all ETFs are equally recommended [2] Group 2 - The Vanguard High Dividend Yield ETF (VYM) is the third-largest dividend ETF with over $72 billion in assets and an expense ratio of 0.04% [3] - The ETF has a yield of 2.3%, which is more than double that of the S&P 500, making it appear attractive at first glance [3] - The fund tracks the FTSE High Dividend Yield Index, which includes companies with above-average dividend yields, but the selection methodology is criticized for being too lax [4] Group 3 - The definition of "high yield" used by the ETF is considered too loose, allowing stocks with yields only slightly above the average to qualify [5] - A more selective high-yield strategy is suggested, either by narrowing the number of qualifying stocks or setting a minimum yield threshold [6] - The ETF holds over 500 stocks, which may dilute the portfolio's effectiveness, indicating a need for a more focused high-yield strategy [7]

Core Insights - Vanguard announced lower fees on 84 share classes of 53 funds, including ETFs, providing clients with a financial benefit [1] Group 1: Fee Reductions - The Vanguard High Dividend Yield ETF now charges an annual fee of 0.04%, reduced from 0.06%, translating to a savings of $2 on a $10,000 investment [4] - Over the past two years, Vanguard has passed on $600 million in savings to clients through various fee reductions [6] Group 2: Fund Performance and Popularity - The Vanguard High Dividend Yield ETF has $72.2 billion in assets under management, making it the third-largest dividend ETF, and its low fees contribute to its popularity among investors [2][5] - The ETF's expense ratio reduction is significant as lower-cost ETFs tend to attract more assets, and Vanguard frequently lowers costs as funds grow [7] Group 3: Investment Considerations - While the expense ratio is important, it is not the only factor; the Vanguard High Dividend Yield ETF is noted for its straightforward investment objective and strong performance, enhancing its appeal despite the low fee [9]

Core Viewpoint - The equity market is undergoing a significant rotation in 2026, favoring dividend ETFs and previously underperforming sectors such as small caps, energy, and materials stocks [1][2]. Dividend ETFs Performance - Dividend stocks and ETFs are benefiting from the outperformance of value stocks and those with strong balance sheets, with yields of 3%-4% making dividend ETFs early winners in 2026 [2]. - Not all high-dividend ETFs are the same, and specific funds are highlighted as strong investment options for 2026 [2]. Schwab U.S. Dividend Equity ETF - The Schwab U.S. Dividend Equity ETF (SCHD) has seen a resurgence due to its focus on quality fundamentals, stable dividend growth, and above-average yield, making it a top performer in the U.S. dividend ETF category [4][7]. - The fund currently offers a yield of 3.7% and has a low expense ratio of 0.06%, making it an attractive long-term investment [6]. Vanguard High Dividend Yield ETF - The Vanguard High Dividend Yield ETF (VYM) employs a straightforward strategy of selecting the top half of dividend-paying stocks based on yield, which has proven effective for investors seeking higher yields [8][9]. - The fund has a diverse allocation across seven sectors, with a 2.5% yield that positions it well for the current market rotation [10][11]. SPDR Portfolio S&P 500 High Dividend ETF - The SPDR Portfolio S&P 500 High Dividend ETF (SPYD) focuses on the 80 highest-yielding securities from the S&P 500 and employs an equal-weighting strategy for diversification [13]. - With a yield of 4.5% and a low expense ratio of 0.07%, this ETF is among the most cost-effective options available, potentially benefiting from expected interest rate cuts in 2026 [15][16].

Core Insights - A dual-income couple nearing retirement with $1.2 million in savings and Social Security benefits must carefully coordinate their Social Security claims and portfolio withdrawals to determine if their savings will be sufficient [2][6]. Financial Snapshot - Morningstar's 2026 research indicates a recommended withdrawal rate of 3.9% for new retirees, which translates to approximately $46,800 annually or $3,900 monthly from a $1.2 million portfolio [4]. - The average aged couple is projected to receive about $3,208 monthly in Social Security benefits in 2026, amounting to roughly $38,500 annually after a 2.8% cost-of-living adjustment. This results in a combined total annual income of around $85,300 or about $7,100 monthly before taxes when combined with portfolio withdrawals [5][7]. Portfolio and Income Strategy - A $1.2 million portfolio, when combined with Social Security, can generate an estimated annual income of $85,300, utilizing the Vanguard Total Bond Market ETF (BND) for fixed income [6][7]. - The Vanguard High Dividend Yield ETF, which includes holdings in companies like JPMorgan Chase, Johnson & Johnson, and Procter & Gamble, offers a yield of 2.39% [6][11]. Spousal Benefits and Claiming Strategy - For couples with uneven earnings histories, spousal benefits are crucial, allowing the lower-earning spouse to claim up to 50% of the higher earner's full retirement age benefit, which can significantly enhance household income [8]. - The sequence of claiming Social Security benefits is critical; delaying the higher earner's benefit until age 70 while the lower earner claims earlier can maximize lifetime payouts, with each year of delay increasing benefits by 8% [10]. Portfolio Allocation - As withdrawals commence, portfolio allocation should shift towards stability, potentially adopting a balanced approach of 60% stocks for growth and 40% bonds for income and reduced volatility. The Vanguard Total Bond Market ETF currently yields 4.13% with a minimal 0.03% expense ratio, providing tax-efficient fixed income [11].

Core Insights - Warren Buffett retains an indirect stake in a secret portfolio that includes exposure to several dividend ETFs through Berkshire Hathaway's New England Asset Management [2][3] - Despite no longer being CEO, Buffett remains Chairman and holds significant shares, particularly A-class shares with voting power [3] ETF Analysis - **iShares Core MSCI EAFE ETF (IEFA)**: - Tracks the MSCI EAFE IMI Index, providing exposure to developed-market stocks outside the U.S. and Canada, including Europe, Japan, Australia, and Hong Kong [5] - Gained 25.6% over the past year, with a dividend yield of 3.48% distributed biannually and an expense ratio of 0.07% [6] - NEAM's holdings in IEFA increased by 35.2%, making it the third-largest holding at 6.37% of its portfolio [6][8] - **Vanguard High Dividend Yield ETF (VYM)**: - Passively tracks higher-dividend-yielding companies matching the FTSE High Dividend Yield index, including REITs [7] - Represents 4.62% of NEAM's portfolio, yielding 2.39% [8] - **iShares Core MSCI International Developed Markets ETF (IDEV)**: - Gained 26.5% in the past year, with NEAM increasing its holdings by 30.1% [8]

Core Viewpoint - The case for dividend-paying stocks is strengthening as investors look towards 2026, with evidence suggesting a potential uptrend has already begun [1] Group 1: ETF Performance - Over the past three months, the Vanguard High Dividend Yield ETF (VYM) has outperformed both the S&P 500 and the Nasdaq-100 indices, indicating a market shift away from megacap stocks [2] - The current yield of the Vanguard High Dividend Yield ETF is 2.5%, which is more than double the S&P 500's yield of 1.1%, suggesting a favorable income opportunity [4] Group 2: ETF Strategy and Holdings - The Vanguard High Dividend Yield ETF selects U.S. stocks based on their forecasted dividends over the next 12 months, focusing on those with above-average yields and weighted by market cap [3] - The ETF currently has a 14% allocation to tech stocks, with its top sector holdings being Financials (21%), Tech (14.3%), Industrials (12.9%), and Healthcare (12.8%), providing a diversified exposure to sectors with growth potential [5][6] Group 3: Economic Context - The economic backdrop, characterized by steady GDP growth, low unemployment, and stable inflation, is favorable for further gains in stock prices, particularly for value and dividend stocks [7] - Financials are benefiting from prolonged higher interest rates, leading to improved profit margins, while increased merger and acquisition activity is generating significant revenue for major banks [9] - Industrials may see cyclical upside if economic expansion continues, and the healthcare sector is experiencing innovation and potential regulatory relief, which could accelerate drug approvals and reduce compliance costs [9]