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<h2>Key Points</h2><ul><li>Since the beginning of 2025, international stocks have outperformed U.S. stocks by a wide margin.</li><li>That momentum still exists today, and it's beginning to show up in a number of sectors.</li><li>International dividend-paying stocks combine value, high yield, and improving fundamentals.</li><li>10 stocks we like better than Vanguard International High Dividend Yield ETF ›</li></ul><p>For much of the past decade, investors have shown little interest in international dividend stocks. The market's preference for U.S. growth equities over that time put this group firmly out of favor.</p><p>But 2025 ushered in a remarkable turnaround. The <strong>Vanguard International High Dividend Yield ETF</strong> <span class="ticker">(NASDAQ: VYMI)</span> returned 38%, more than doubling the 18% return of the <strong>Vanguard S&amp;P 500 ETF</strong>. The rally hasn't ended either. It's beating the <strong>S&amp;P 500</strong> by a 12% to 10% margin year to date, as of May 14.</p><p><em><strong>Will AI create the world's first trillionaire?</strong> Our team just released a report on the one little-known company, called an &#34;Indispensable Monopoly&#34; providing the critical technology Nvidia and Intel both need. Continue »</em></p><p>The case for international investing doesn't appear to be over either.</p><img alt="Asset price returns on a digital scoreboard." src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg2NzAzNC9nZXR0eWltYWdlcy01MTEwMDA5NDEuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg2NzAzNC9nZXR0eWltYWdlcy01MTEwMDA5NDEuanBnJnc9NzAw"/>
<p>Image source: Getty Images.</p>
<h2>Why the <strong>Vanguard International High Dividend Yield ETF</strong> works right now</h2><p>Ultimately, share prices are driven by fundamental strength. The strong investor preference for U.S. stocks has certainly benefited their relative performance, but international markets have struggled with avoiding recession, high inflation, weak corporate earnings, and a stronger dollar.</p><p>Those trends are beginning to reverse. These factors are slowly beginning to turn into tailwinds.</p><ul>
<li><strong>Valuations:</strong> International stocks almost always trade at lower multiples than U.S. stocks, but the current gap is especially wide. Vanguard International High Dividend Yield ETF's price-to-earnings (P/E) multiple of 14 is nearly half that of the Vanguard S&amp;P 500 ETF's 27. That kind of discount provides a larger-than-average value opportunity if conditions continue to improve.</li>
<li><strong>Improving growth outlook:</strong> Developed foreign markets are still a mixed bag, but emerging markets are forecast to deliver around 4% gross domestic product (GDP) growth over the next couple of years. That's double the expected 2% growth of the United States. As global economies stabilize and earnings outlooks improve, international stocks have the potential to continue their momentum.</li>
<li><strong>De-dollarization:</strong> Whether it's reducing U.S. Treasury holdings, central banks hoarding gold, or altering global supply chains, there's been a worldwide push to lower reliance on the U.S. dollar. The greenback has remained relatively stable over the past year, but it's well below the levels it was at in the few years prior. International stocks get a tailwind from a weaker dollar, and that could help enhance returns.</li>
</ul><h2>Vanguard International High Dividend Yield ETF: Performance &amp; key metrics</h2>
<section><table>
<thead>
<tr>
<th scope="col">Metric</th>
<th scope="col">VYMI</th>
</tr>
</thead>
<tbody>
<tr>
<td>Expense ratio</td>
<td>0.07%</td>
</tr>
<tr>
<td>Dividend yield</td>
<td>3.4%</td>
</tr>
<tr>
<td>Price-to-earnings (P/E) ratio</td>
<td>14.0</td>
</tr>
<tr>
<td>Year-to-date return (2026)</td>
<td>10%</td>
</tr>
<tr>
<td>3-year average annual return</td>
<td>21.7%</td>
</tr>
<tr>
<td>5-year average annual return</td>
<td>12.6%</td>
</tr>
<tr>
<td>Top sectors</td>
<td>Financials (42%), energy (9%), materials (7%)</td>
</tr>
</tbody>
</table></section>
<p>Data source: Vanguard.</p><p>The Vanguard International High Dividend Yield ETF carries with it the typical Vanguard expense ratio of just 0.07%. The 3.4% dividend yield is meaningfully higher than the 2.3% rate of the <strong>Vanguard High Dividend Yield ETF</strong>. Distributions are paid quarterly, so there is a relatively consistent income stream.</p><p>The big thing to note with this fund is the high concentration in financial stocks. Those typically come with higher yields, but they're also cyclically sensitive. If there's a scenario where the global economy slows and the demand for borrowed capital starts shrinking, these companies will likely be among the first to take the hit.</p><p>But there's an intriguing case for owning this fund and international stocks in general. Fundamentals are improving, growth is showing some signs of picking up, and there's been momentum building for about 18 months. The time could be coming soon for some of that value to get unlocked.</p><h2>Should you buy stock in Vanguard International High Dividend Yield ETF right now?</h2>
<p>Before you buy stock in Vanguard International High Dividend Yield ETF, consider this:</p>
<p>The <em>Motley Fool Stock Advisor</em> analyst team just identified what they believe are the <strong>10 best stocks</strong> for investors to buy now… and Vanguard International High Dividend Yield ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.</p>
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<p style="color: #767676; text-align: left"><em>*Stock Advisor returns as of May 19, 2026. </em></p><p><em>David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard High Dividend Yield ETF and Vanguard S&amp;P 500 ETF. The Motley Fool has a disclosure policy.</em></p>
<p>The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.</p>
</div>

VYMI

<p>The Vanguard International High Dividend Yield ETF (VYMI) has outperformed U.S. stocks, returning 38% in 2025 compared to the S&P 500's 18%. With a P/E ratio of 14, it offers significant value compared to U.S. stocks. Factors like improving growth outlooks and a weaker dollar may enhance returns. However, the fund's high concentration in financials poses risks if the global economy slows. Analysts suggest considering other stocks for investment, as VYMI wasn't among the top picks.</p>

The High-Yielding Vanguard ETF That Belongs in Every Investor's Portfolio