In 2026, the Vanguard Value ETF and High Dividend Yield ETF have climbed to near-record levels, showing a shift in investor priorities. While the Nasdaq Composite and S&P 500 rise, these funds are outperforming the broader market. This trend has caught the eye of those seeking more reliable returns.
Value stocks such as Caterpillar and JPMorgan Chase are gaining ground as companies in the AI space deliver results. Caterpillar raised its dividend for the 32nd year in June, showing long-term dependability. JPMorgan Chase's stock jumped 126% over three years due to strong earnings. These companies offer real value through profits and dividends, unlike companies like SpaceX, which still report losses.
Value Stocks Challenge Perceptions
Micron Technology and Broadcom are top holdings in the Vanguard Value ETF, challenging old ideas about value stocks. Both have seen strong gains from memory chips and AI infrastructure. These gains come from real revenue and profit growth, not just speculation.
SpaceX closed at $108.37 on July 31, down sharply from its peak. Despite this, nine Vanguard ETFs still own it and may continue buying if the price falls. However, it isn’t included in the Value or High Dividend Yield ETFs due to its lack of consistent profitability. The company reported a $4.94 billion net loss in 2025.
The Value and High Dividend Yield ETFs focus on companies with reliable earnings and dividend histories. SpaceX, by contrast, lacks this track record. While the company has potential, its future growth relies on unproven projections. These ETFs are built for steady returns, not high-risk bets with uncertain outcomes.
Attractive Valuations and Performance Metrics
As of June 30, the Value ETF had a 21.4 P/E ratio and a 1.9% 30-day SEC yield. The High Dividend Yield ETF had a 21.6 P/E and a 2.3% yield. These figures suggest the ETFs are attractively priced compared to the broader market.
With the Nasdaq down 5% year to date and the S&P 500 below its record high, value ETFs are gaining popularity. These funds offer a balanced approach to wealth growth, emphasizing earnings-driven growth and steady returns.
While the Value ETF outperforms the S&P 500, the Growth ETF has only risen 5% in 2026. This highlights the appeal of value stocks such as Caterpillar and JPMorgan Chase, which have benefited from the AI boom. Caterpillar sees demand for machinery in data centers, while JPMorgan Chase thrives from AI-driven efficiencies.
Broadcom’s AI networking efforts, including its work with Alphabet on Tensor Processing Units, have boosted performance. Micron’s success in memory chips has also driven gains, as its revenue and stock price rise together. These examples show how earnings and real applications drive value stock performance.
Income-Focused Appeal and Stability
For income-focused investors, the High Dividend Yield ETF offers advantages. Caterpillar's 32-year dividend streak and JPMorgan Chase's strong earnings make it appealing. With a 2.3% yield, it balances long-term growth with immediate income.
The Value ETF's 21.4 P/E is slightly lower than the High Dividend Yield ETF's 21.6 P/E. Both funds are at reasonable valuations, suggesting investors are positioning for growth while managing risk. These ETFs are well-suited for investors who want steady returns and avoid growth stock volatility.
The S&P 500 is near its all-time high but still below it. The Value ETF's 25% gain in 2026 compares well to the S&P's modest 5% rise. This gap is notable in a tech sector where companies like SpaceX remain unprofitable.
SpaceX is down 52% from its peak as of July 31, showing the risks of speculative investments. The company may have promising potential, but its lack of consistent profits makes it a poor fit for income- and value-focused investors. The Vanguard ETFs offer a tested path to growth through proven companies.
For investors with $1,000 or more to invest, the Value and High Dividend Yield ETFs offer strong potential. These funds provide exposure to companies delivering measurable results through earnings and dividends. Despite SpaceX's long-term potential, its lack of profitability makes it incompatible with these ETFs' goals.
In a market where value and income stocks outperform, the Vanguard Value ETF and High Dividend Yield ETF are smart choices. With strong fundamentals, clear earnings trajectories, and reliable dividends, they’re well-positioned to beat the broader market. As the year continues, these funds may offer more gains for a diversified portfolio.