2 Vanguard ETFs That Can Be Cash-Generating Machines for Your Portfolio for Years to Come

If you're a long-term investor who just wants some quality investments to hold for the long term that generate plenty of cash along the way, exchange-traded funds (ETFs) can make a lot of sense. The diversification they offer can minimize your risk in the long run, and there is no shortage of funds that focus on dividends.

Vanguard funds can be particularly appealing because their fees are low and thus, they can make for ideal investments to simply buy and hold onto a long time. Two excellent ones to consider if you want to accumulate some strong cash flow are the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) and Vanguard High Dividend Yield ETF (NYSEMKT: VYM).

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1. Vanguard Dividend Appreciation ETF

The Vanguard Dividend Appreciation ETF pays a relatively mild dividend yield of 1.6%, which is a little higher than the S&P 500 average of 1.2%. But it's the fund's focus on dividend growth that makes it an attractive investment option, particularly for long-term investors. By hanging on to the ETF and benefiting from rising dividend payments, your recurring income can grow over time.

The fund also has a low expense ratio of 0.05%, which is key when investing for the long haul as even a few percentage points can add up significantly over the years. In exchange for the fund's modest fees, you get a position in more than 330 quality dividend stocks.

The top three names in the ETF currently are Broadcom, Microsoft, and JPMorgan Chase. The largest holding, Broadcom, accounts for about 6% of the overall portfolio. There's some good diversification, with the ETF as the vast majority of its holdings are much smaller positions, which is crucial for long-term investing and in minimizing your risk.

Thus far in 2025, the fund has generated total returns (which include dividends) of 11%, which is only a few points below the S&P 500's tally of 14%. But in a down year, the Dividend Appreciation ETF could fare better than the index, plus its dividend growth can help pad your returns in the long run, enabling you to earn more on your original investment.

2. Vanguard High Dividend Yield ETF

The Vanguard High Dividend Yield ETF already offers a high yield today -- around 2.5%, which is more than double the S&P 500 average. Its focus is on high-yielding stocks rather than simply dividend growth stocks. Thus, it includes a broader range of stocks; it had 579 holdings as of Aug. 31. The fund's expense ratio is also fairly low at 0.06%.

There is some overlap between this and the other Vanguard fund, as Broadcom and JPMorgan Chase are also among the top holdings in the High Dividend Yield Index. However, Microsoft, which offers a low yield of less than 1%, isn't among the top holdings. Instead, it's ExxonMobil and its 3.5% yield that makes it into the top three.

There can be a bit more risk when focusing on high-yielding stocks, as those payouts can be cut or suspended if a company's financial performance isn't strong enough to support them. But with so much diversification in this ETF, the risk for investors isn't high. Even if not all the payouts prove to be safe, the fund can continue to offer a high yield, as its exposure to any one stock isn't significant -- besides Broadcom and JPMorgan Chase, no other stock accounts for even 3% of the portfolio.

This year, the ETF's returns have been in line with how the Vanguard Dividend Appreciation Index has performed, as both funds are up over 11% when including their payouts.

Overall, these are both great investments to hang on to for the long term, as they can generate plenty of recurring dividend income over the years.

JPMorgan Chase is an advertising partner of Motley Fool Money. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase, Microsoft, Vanguard Dividend Appreciation ETF, and Vanguard Whitehall Funds - Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.