As a 34-year-old working full time, I’m in the accumulation phase of building my investment portfolio. That means I care more about growing my wealth over time than receiving income from my investments right now. One of the most common questions I get is: why don’t I invest in high-dividend ETFs like VHY?
The short answer? While high dividends can sound appealing, the lack of capital growth in many dividend-heavy ETFs makes them a poor fit for someone with decades of compounding ahead. Instead, I invest in growth-oriented ETFs like IVV, which tracks the S&P 500 — and here’s why.
🧠What Are VHY and IVV?
Let’s start with a quick overview of the two ETFs:
đźź© Vanguard Australian Shares High Yield ETF (VHY)
- Focuses on high dividend-paying Australian companies
- Dividend yield: ~6%
- Companies tend to be mature, slower-growing (e.g. banks, miners, telecoms)
- Regular income, but lower growth
🟦 iShares S&P 500 ETF (IVV)
- Tracks the S&P 500 Index – 500 largest U.S. companies
- Dividend yield: ~1.3%
- Strong exposure to growth sectors like tech, healthcare, consumer discretionary
- Focused on capital appreciation
đź“Š 10-Year Performance Comparison: VHY vs IVV (as of 2025)
🟦 IVV (S&P 500 ETF)
- 10-Year Total Return: ~221.79%
- Annualized Return: ~12.28%
- Dividend Yield: ~1.38%
đźź© VHY (Aussie High-Yield ETF)
- 10-Year Total Return: ~90%
- Annualized Return: ~6.6%
- Dividend Yield: ~6.06%
đź“Ś Data sources: Yahoo Finance, Vanguard, BlackRock, and financecharts.com
Even with dividends reinvested, IVV has outperformed VHY more than 2:1 in total return terms over the past decade — driven primarily by capital growth in large-cap U.S. companies.
đź’¬ My Personal Take: Why Capital Growth Comes First
At this stage in life, here’s why I focus on capital growth:
- I’m not relying on investment income.
My salary covers my lifestyle. I don’t need my portfolio to pay me yet. - Compounding favors growth.
Every extra percent of growth in my 30s could mean thousands more in retirement. - High dividends often mean low reinvestment.
Companies that pay big dividends aren’t usually reinvesting in expansion. - The U.S. market offers diversified global exposure.
Through IVV, I get exposure to fast-growing, world-leading companies like Apple, Microsoft, and Google.
🤔 But What About Income Later?
That’s for later. Right now, I want my portfolio to grow. But in my 50s or 60s, I may rotate into income-focused ETFs like VHY or LICs. It’s all about timing your strategy to your phase of life.
🧾 Quick Summary
| Feature | VHY (Dividends) | IVV (Growth) |
|---|---|---|
| Dividend Yield | ~6% | ~1.3% |
| Capital Growth | Lower | Higher |
| 10-Year Return | ~90% total | ~221% total |
| Best For | Income in retirement | Long-term wealth building |
⚠️ Investment Warning
While the data above reflects past performance over a 10-year period, past performance is not indicative of future results. Markets are unpredictable, and returns can vary dramatically based on economic cycles, interest rates, and geopolitical factors.
đź“„ Disclaimer
This article is for informational and educational purposes only and does not constitute financial advice. It reflects my personal opinion and investment approach as of 2025. You should consider your own objectives, financial situation, and needs before making investment decisions. Speak with a licensed financial adviser if you’re unsure whether a particular investment is right for you.
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Fivesting 
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