The Vanguard High Dividend Yield ETF (VYM) hiked its quarterly dividend distributions by 12.56%.

The VYM ETF is more diversified than the S&P 500 and, with its 2.34% yield, is ideal for retirees.

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Exchange traded funds (ETFs) can be a cornerstone of retirement investing, especially for retirees seeking reliable income sources. Instead of chasing fast wealth, priorities will include solid yield, growth potential, and safety through diversification.

Among the best-known fund managers currently offering high-yield ETFs suitable for retirees is Vanguard. Indeed, there’s a wide selection of Vanguard funds providing investors with reliable passive income.

One Vanguard ETF in particular is highly attractive to retirement income seekers as its dividend distribution rose substantially not long ago. This isn’t a get-rich-quick scheme by any means — only a Vanguard offering that anyone in or near retirement shouldn’t overlook in 2026.

Instead of making you wait any longer, I’ll go ahead and reveal my hidden Vanguard fund pick for retirees. It’s the Vanguard High Dividend Yield ETF (NYSEARCA:VYM), a fund that’s appropriate for long-term investors from practically all walks of life.

Here’s the scoop. In its most recent dividend payout change, the Vanguard High Dividend Yield ETF raised its quarterly distributions from $0.8417 to $0.9474 per share. That’s a little more than a dime per share, so does it really add up to much?

The answer is definitely yes. It represents a dividend hike of 12.56%, which could translate to a major boost in long-term returns for retirees holding the VYM ETF.

Furthermore, the Vanguard High Dividend Yield ETF currently advertises a 30-day SEC yield that would equate to an annualized dividend yield of 2.34%. You might find individual stocks with higher yields than that, but 2.34% is quite respectable for an ETF.

Also, the Vanguard High Dividend Yield ETF only deducts 0.04% worth of operational expenses (known as the expense ratio) per year from the share price. In other words, the VYM ETF’s expected yield far exceeds its expenses, and the 12.56% quarterly dividend hike is a real attention-getter.

In terms of great features for retirees, Vanguard really knocked it out of the park with its High Dividend Yield ETF    the VYM ETF. Safety-seeking investors will often emphasize diversification, and this fund is more diversified than you would probably expect.

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Think about it: how many ETFs out there are more diversified than the S&P 500, which includes around 500 stocks? Believe it or not, the Vanguard High Dividend Yield ETF includes 562 stocks in its holdings list, so it actually beats the S&P 500 in this respect.

Of course, quality is more important than quantity, but you can rest assured that the VYM ETF contains a boatload of blue-chip stocks in multiple market sectors. These include Walmart (NYSE:WMT), Broadcom (NASDAQ:AVGO), JPMorgan Chase (NYSE:JPM), and Procter & Gamble (NYSE:PG).

It’s no wonder, then, that the share price of the Vanguard High Dividend Yield ETF has trended up over the years. It’s replete with top-tier businesses that also happen to pay attractive dividends.

Vanguard characterizes the VYM ETF as a “large value” fund, and that’s an apt description. The Vanguard High Dividend focuses on large-cap companies, which enhances the fund’s safety profile. Plus, Vanguard calculates the fund’s price-to-earnings (P/E) ratio as 21.1x, which is reasonable and suggests a good value.

Diversification is a key feature of the VYM ETF, but the special sauce that makes the fund stand out is its emphasis on yield. To quote Vanguard, its High Dividend Yield ETF tracks an index that “measures the investment return of common stocks of companies characterized by high dividend yields.”

Vanguard further clarifies that the VYM ETF “provides a convenient way to track the performance of stocks” expected to have “above-average dividend yields.” That’s how the fund manages to provide a 2.34% yield with a massive basket of 562 stocks.

Truly, the Vanguard High Dividend Yield ETF should attract legions of retirees irrespective of the 12.56% dividend hike. It’s a simple and convenient way to extract quarterly passive income while instantly diversifying a portfolio and keeping the expenses low.

Granted, the 12.56% dividend raise is newsworthy and will bring more retirees into the fold. After all, big dividend hikes can lead to greater wealth-building opportunities for buy-and-hold investors.

So, if the dividend increase is the reason you’re interested in the VYM ETF, that’s perfectly fine. Vanguard’s High Dividend Yield ETF is sufficiently de-risked to be appropriate for retirement investing, with or without the attention that a dividend mega-raise will bring.

Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.

And no, it’s got nothing to do with increasing your income, savings, clipping coupons, or even cutting back on your lifestyle. It’s much more straightforward (and powerful) than any of that. Frankly, it’s shocking more people don’t adopt the habit given how easy it is.