For those that follow my blog and my Twitter feeds, you are aware that my current portfolio is heavy with ETFs, About 82% of my investment portfolio consists of ETFs and the balance of 17% are individual company stocks. Within those ETFs I have the following areas invested in:
- Real Estate – VNQ (Vanguard Real Estate ETF).
- Energy – VDE (Vanguard Energy ETF)
The other 2 Vanguard funds are concentrated on high value & high dividends across many sectors (VFIAX & VYM).
I would like to add a healthcare ETF and a technology ETF to my portfolio. I am looking at VGT and VHT. Both are pricey by my standards but both are paying decent dividends, and that what I in this for. So, I now have to go through the decision process of which one do I invest in first. I will be investing in both but it’ll be completed over the next few months. I do have other expenses that I am obligated to handle first.
I looked at the data for VHT (Vanguard Health Care ETF) via my TD Ameritrade account. Currently the fund is trading at $204.84 per share which is a bit high for my purposes. In looking at this fund’s 52 week range you see that its share price is at the end of the high range. The chart shows the fund’s value is increasing so I doubt that the price will be dropping drastically, barring any unforeseen circumstances. But now for the key question. What about the dividends? VHT has an annualized payout of $2.55/share (a 1.24% yield). If the share price were to drop to the other end of the price spectrum of $138.11 the yield would then be 1.85%. The average 5 year dividend growth rate is 23.01%.
According to Morningstar the risk factor for this fund shows that it’s rated as Below Average and the returns are rated as Average. Both of which are a positive factor for me. Morningstar has the fund designated as a Large Blend fund. The one thing that I am not happy with for this fund is that the Net Expense Ratio is about 0.10%. This is the maximum I would prefer.
The market Return for the funds is 6.39% so far for 2020, For 2019 it was 21.86%. Some of the company stocks that are included in this fund are:
- JNJ – Johnson & Johnson
- UNH – UnitedHealth Group
- PFE – Pfizer Inc
- MRK – Merck & Co Inc
- ABT – Abbott Laboratories
- TMO – Thermo Fisher Scientific Inc
- ABBV – AbbVie Inc
- AMGN – Amgen Inc
- BMY – Bristol-Myers Squibb Co
- MDT – Medtronic PLC
The other Vanguard fund that I checked out on TD Ameritrade was VGT (Vanguard Information Technology Index Fund ETF). This fund is another pricey one that is trading at its 52 week high range of $313.59, Morningstar has this fund rated Below Average risk and Above Average return. They also have it designated as a Large Growth fund.
In digging into the data for this fund I find that the dividend payout is annualized at $3.00/share (a 0.96% yield). In screening just for high paying dividend stock with a yield greater than 5%, this fund would not have shown up on my radar. But is still pays a decent dividend even if the share price makes it a challenge for the average person to purchase more than just a couple of shares. The Net Expense ratio is also at the maximum preferred ratio of 0.10%.
The returns for this fund for 2020 so far are 21.33%. For 2019 the returns were 48.61. Some of the company stocks that are included in this fund are:
- AAPL – Apple
- MSFT – Microsoft
- V – Visa
- MA – Mastercard
- NVDA – Nvidia
- PYPL – PayPal
- ADBE – Adobe
- INTC – Intel
- CSCO – Cisco
- CRM – Salesforce
I really like both of these funds but I can’t afford to buy both of them at this time. So, I have to make a decision which one I want to buy first. It comes down to 2 factors: a) share price, and b) dividend payout (after all, that’s what I’m interested in). They’re both pretty close in both of these areas.
The final decision at this time for me will be that I will be buying the funds in this order:
- VHT (Vanguard Health Care ETF)
- VGT (Vanguard Information Technology Index Fund ETF)