International High-Dividend ETF: A Smart Choice for Passive Income Seekers in 2025

The Case for Looking Beyond the S&P 500

When it comes to dividend income, the S&P 500 disappoints with just 1.15% yield. But savvy investors know better. The Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) offers a compelling alternative, delivering a robust 3.72% dividend yield to those willing to venture into global markets.

As the international counterpart to the widely-held Vanguard High Dividend Yield ETF (NYSEMKT: VYM), this high-dividend ETF provides exposure to dividend-paying stocks worldwide. While other international funds boast higher yields, this particular offering stands out because it balances income generation with actual payout sustainability—a combination that lets investors rest easier.

How This High-Dividend ETF Weeds Out Risky Payers

The seduction of ultra-high yields often masks a dangerous truth: some companies simply cannot maintain their payouts. Dividend traps await the careless investor, and international markets are no exception.

This high-dividend ETF takes a disciplined approach. Its selection universe is cut in half, immediately filtering out shaky dividend payers prone to cuts or suspensions. Rather than weighting holdings by yield—a dangerous approach—the fund uses market capitalization weighting. This method naturally favors larger, more stable companies capable of sustaining and growing their dividends over time.

The result? Single-stock risk remains minimal across 1,534 holdings, with no position exceeding 1.65% of the portfolio. All this comes at a modest 0.17% annual cost.

Why International Dividends Are Heating Up

For years, domestic stocks dominated returns, pushing international diversification into the background. That calculus shifted dramatically in 2025. Investors who maintained geographic diversification were rewarded as international markets staged a durable comeback.

Beyond 2025’s performance, structural growth in global dividends justifies the pivot. European dividend payouts have climbed steadily over recent years with growth expected to accelerate. Japan, representing 14.3% of this high-dividend ETF’s holdings, is seeing explosive dividend growth—nearly two dozen Japanese companies doubled their payouts in 2025 alone. Europe, comprising 43.7% of regional exposure, continues its multi-year streak of higher distributions.

Diversification Made Simple

Building geographic balance into a portfolio can feel complicated. This high-dividend ETF simplifies the process. With holdings spread across 1,534 international companies, concentrated positions are impossible. The fund delivers genuine diversification at a reasonable cost, making it an attractive vehicle for investors seeking exposure to international dividend growth without the complexity.

Whether you’re seeking higher income than the S&P 500 provides or simply strengthening your portfolio’s geographic mix, this high-dividend ETF deserves serious consideration for long-term investors.