Investing in exchange-traded funds (ETFs) can be an effective way for investors to reduce risk and collect dividend income. There are thousands of ETFs that investors have to choose from, but many of the best ones come from Vanguard, where the fees are often minimal, and investors can get excellent diversification.
For investors seeking relatively safe, quality long-term investments that can also generate a ton of dividend income, there are a couple of attractive Vanguard funds to consider: the Vanguard Utilities ETF (VPU -0.01%) and the Vanguard Energy ETF (VDE +1.33%). Here’s why these two funds can be excellent long-term options for investors to buy and hold right now.
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Vanguard Utilities ETF
The Vanguard Utilities ETF has had a decent year thus far in 2026, rising by around 4%. While that’s not as good as the broad S&P 500 index, which is up over 12%, utility stocks and similar types of low-risk investments often require investors to sacrifice some gains in exchange for long-term stability.
Utility stocks are coveted for their rock-solid safety and dividend income. And within the Vanguard Utilities ETF, that’s exactly what investors are getting. This fund invests in various utility companies, including ones that distribute water, electricity, and gas. It’s not a terribly large fund, as there are 68 holdings, but it includes big utility stocks such as NextEra Energy, Duke Energy, and American Electric Power.
Today’s Change
(-0.01%) $-0.01
Current Price
$191.00
Key Data Points
AUM
$11B
Dividend Yield
2.71%
Expense Ratio
0.09%
Top Holdings
NEE
11.81%
SO
6.95%
DUK
6.36%
The ETF charges a small expense ratio of 0.09%, making it an attractive low-cost investment option. Meanwhile, it pays a dividend that yields about 2.7%. While that may not seem massive, it comes at a time when yields are down due to rising share prices. The S&P 500 average yield, for example, is just over 1% right now.
For investors seeking stability and dividends, this can make for a terrific long-term investment to just buy and forget about. Investors, however, should remember to temper their expectations for this low-volatility investment, as gains are unlikely to be massive.
Vanguard Energy ETF
An ETF that has been generating some terrific gains this year is the Vanguard Energy ETF. It’s up an astounding 41%, as it has been beating the market. The reason is simple: oil prices have been rising, and the fund is full of top oil and gas stocks, including ExxonMobil, Chevron, and ConocoPhillips. Just those three stocks together account for 42% of the entire portfolio.
There are total of 111 stocks in the fund as of the end of July, so there is a bit more diversification here than with the utility-focused Vanguard fund. And similar to that fund, the Vanguard Energy ETF also has an expense ratio of 0.09%. On a $50,000 investment, that would equate to just $45 in annual fees.
Despite the ETF’s strong gains this year, it still offers an above-average yield, paying 2.4%, as it too can be a solid income-generating investment to hang on to.
Vanguard World Fund – Vanguard Energy ETF
Today’s Change
(1.33%) $2.35
Current Price
$178.97
Key Data Points
AUM
$12B
Dividend Yield
2.25%
Expense Ratio
0.09%
Top Holdings
XOM
22.03%
CVX
14.36%
COP
5.83%
The fund can be particularly attractive as a way to hedge against inflation and rising oil prices, which can often spell bad news for other stocks and the economy as a whole. Within this ETF, investors can not only collect a great yield, but also gain exposure to top stocks that can do well when others are struggling. In 2022, for instance, when the S&P crashed by more than 19%, the Vanguard Energy ETF rose by 56%. And by comparison, the Vanguard Utility ETF was down around 2%. This is without factoring in dividends.
For investors seeking dividend income and a way to quickly and effectively diversify their portfolios, both of these ETFs can be great options to consider right now.
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