Vanguard ETFs yield focus

What happened: International stocks have outperformed U.S. stocks since early 2025, with this trend persisting into 2026. Specifically, international dividend-paying stocks have gained traction due to their combination of value, high yield, and improving fundamentals. Vanguard's VXUS ETF, which provides broad exposure to both developed and emerging markets, has a higher dividend yield than Schwab's SCHE, which focuses exclusively on emerging markets. Meanwhile, Vanguard's Extended Duration Treasury Index ETF (EDV) offers an attractive 5% yield but exposes investors to risks associated with the long end of the yield curve.

Market impact: This narrative impacts income-oriented investors seeking exposure to international markets. VXUS and EDV, with their higher yields and broad diversification, may attract investors looking for income and growth. However, investors should be aware of the risks associated with EDV's focus on long-term bonds. Additionally, the performance of international stocks relative to U.S. stocks may influence asset allocation decisions.

What to watch next: Investors should monitor the upcoming earnings reports from key international companies, such as those in the VXUS portfolio, to gauge the sustainability of their dividend growth and fundamentals. Additionally, keep an eye on global economic data releases, as they may provide insight into the continuing strength of international markets relative to U.S. markets. Lastly, watch the yield curve dynamics, as changes in long-term interest rates could impact the performance of EDV.