ETF Battles: NOBL vs. VYM – Which Dividend ETF is the Better Choice?

  • NOBL and VYM go against each other in key areas, including cost, yield and a mystery category
  • Both funds own dividend stocks but with subtle and meaningful differences in strategy
  • Both ETFs are head-to-head rivals in a heated fight for assets

Ron: ETF Battles is an easy show to understand. We sort through your battle requests and we pit two ETFs against each other, and then someone gets clocked. Any further questions? Good, I didn’t think so.

Today’s ETF battle is between the ProShares S&P 500, Dividend Aristocrats ETF (NOBL) agains the Vanguard High Dividend Yield ETF (VYM). Both of these funds track dividend paying stocks, but they do it using different underlying indexes and quite different strategies. VYM by the way is the larger ETF between the two. It’s got around $25 billion in assets, whereas NOBL has just 5.7 billion. Fund assets is a good stat for color, but it really doesn’t get to the root of who wins this battle, so we gonna have to strip these two ETFs naked and look at them from all different angles.

Before we get started, we really appreciate the comments and keep those ETF Battle requests coming. Be sure to #ETFBattles and give us your tickers. Helping us to judge today’s matchup is Dave Kreinces at ETF Portfolio Management and Mike Akins at ETF Action, the best in the business! Gentlemen, I’m humbled by your presence.

So we got four battle categories, cost, yield, performance, and a mystery category. Now for the mystery category, that’s where judges get to pick which factor or maybe several factors are important to determining the potential final winner of this match up. So I don’t know what the mystery category is. We gonna just have to wait to see what our judges come up with. My battle scorecard, as you can see, is blank, which means it’s ready and I’m going to fill it out. We’re gonna begin with the first grading category. You’ve got 30 seconds. We gonna begin with costs. Dave, go.

Dave: So the cost is a whopping 0.06% for Vanguard’s dividend ETF, and 0.35% for ProShares Dividend Aristocrats. So Vanguard’s VYM is lower cost of the two. I don’t even think Mike’s overlapping symbol analysis can help ProShares here. Investors should remember to be reluctant to deviate from the S&P 500, unless it’s really worth it. And since the S&P 500’s cost is just three basis points, these ETFs are crazy expensive. So the winner on cost goes to VYM, with another asterisk in favor of the S&P 500.

Ron: All right. I almost had to throw a yellow flag there because of you poking fun at another judge. So just be very careful. So Mike, let’s shift to you. Cost, who wins the battle?

Mike: So big shocker here. I’m going to give it to Vanguard and VYM. They obviously provide extremely well diversified products for basically nothing. And if you’re looking to allocate to broad market segments, it’s hard to go wrong with a Vanguard product. But recognize that it is that, it’s a broad market segment and you’re owning a broad part of the market. One thing for Dave’s comment on expensive, it’d be interesting how he judges expensive when you’re considering if you want PE ratios and compare say the PE ratio of VYM or NOBL to that of QQQ where you’re going to find that historic discounts right now on relative basis. But I’m getting way outside of bounds here. Going back to the question, VYM is my cost winner.

Ron: Excellent. So we need to move on to the next battle category, which is dividend yield. Let’s stick with you. Go ahead, Mike,

Mike: Easy win for VYM. VYM is a high dividend strategy, whereas NOBL is a dividend growth strategy. And if you really take a look at the portfolios, you can see that both in perspective of yield with VYM yielding a good 100 basis points more than NOBL, we also can see it in the dividend growth or just growth characteristics in general. NOBL’s going to have a higher growth characteristics, and as we get to performance, that’ll explain a lot as to why NOBL has done much better on the more recent history.

Ron: Well done. Dave, you’re up. Dividend yield, who wins the battle between these two ETFs?

Watch the full episode of #ETFBattles between NOBL vs. VYM at ETFguide TV


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