Key Points

Micron, Broadcom, and Caterpillar illustrate value stocks harnessing AI-fueled expansion.
Value- and income-oriented ETFs avoid SpaceX due to inconsistent profitability.
Low-cost value and income ETFs suit investors seeking yields above those of the S&P 500 and growth funds.

Recent strong gains in Amazon and Microsoft fueled a Nasdaq Composite rebound and brought the S&P 500 within 3 percent of its peak. Even so, value stocks along with many high-dividend ETFs have outperformed major benchmarks this year.

The Vanguard Value ETF and Vanguard High Dividend Yield ETF both sit near record levels while beating the S&P 500 and Nasdaq in 2026, in contrast to the Vanguard Growth ETF which has risen only 5 percent year to date.

Space Exploration Technologies ended July 31 at 108.37 dollars, its lowest close since its June 12 debut, marking a 52 percent drop from its peak. Despite the decline, nine Vanguard ETFs already hold SpaceX and plan to continue purchases if prices fall further.

Here is why SpaceX ownership differs from holdings in the Vanguard Value ETF and Vanguard High Dividend Yield ETF, and why both funds remain attractive now.

Image source: Getty Images.

Earnings-driven growth

A common view holds that value stocks are dull, slow-moving firms with strong cash flows, frequent dividends, and modest valuations. A clearer perspective sees them as priced according to current mature operations rather than solely on expansion prospects. Earnings growth typically lifts value stock prices, while growth stocks may swing on perceptions of future bets succeeding.

Although many leading value names are stable and traditional, numerous cases show value stocks surpassing benchmarks over time or entering phases of faster earnings expansion.

Consider the top position in the Vanguard Value ETF: Micron Technology at a 4.9 percent allocation. Broadcom ranks as the largest holding in the High Dividend Yield ETF at 7.3 percent. These semiconductor firms were once seen as value plays, yet surging memory demand boosted Micron earnings and its share price. Broadcom has expanded its custom AI chips and networking solutions through work with hyperscalers such as Alphabet on efficient Tensor Processing Units.

While Micron and Broadcom may now appear growth-oriented after recent advances, they differ from SpaceX because earnings gains drive their appreciation. SpaceX posted a 4.94 billion dollar net loss in 2025 and is likely to remain free cash flow negative amid costly orbital AI data center plans.

Caterpillar ranks among the top 10 holdings in both ETFs. Long viewed as a cyclical value leader with steady dividend increases, it raised its payout for the 32nd straight year in June. It has also gained from rising AI data center builds and energy needs.

JPMorgan Chase stands as the second-largest position in both funds. Its shares have climbed 126 percent over three years thanks to earnings-supported growth.

Balancing value, income, and growth

The Vanguard Value ETF and Vanguard High Dividend Yield ETF offer strong options for investors seeking quality firms with visible growth paths instead of those requiring multiple favorable outcomes.

SpaceX holds vast potential with an enormous addressable market and superior technology. Yet even after its drop, its long-term outlook rests on speculative future scenarios, whereas Micron, Broadcom, Caterpillar, and JPMorgan Chase deliver actual profits and dividends.

As of June 30, the Value ETF shows a 21.4 price-to-earnings ratio and 1.9 percent 30-day SEC yield, close to the High Dividend Yield ETF at 21.6 P/E and 2.3 percent yield.

In comparison, the Vanguard S&P 500 ETF carries a 27.5 P/E and 1 percent yield as of June 30, while the Vanguard Growth ETF has a 35.6 P/E and 0.4 percent yield.

All four ETFs carry low costs: the Value, Growth, and S&P 500 ETFs at 0.03 percent expense ratios, with the High Dividend Yield ETF at 0.04 percent.

Together, the Vanguard Value ETF and Vanguard High Dividend Yield ETF attract investors pursuing reliable income from profitable, leading companies.

Should you buy shares in the Vanguard Value ETF now?

Before purchasing, note the following.

The Motley Fool Stock Advisor team recently named its 10 top stocks for purchase, and the Vanguard Value ETF was not included. The selected 10 stocks may deliver substantial gains ahead.

For example, Netflix appeared on the list December 17, 2004; a 1,000 dollar investment then would be worth 386,727 dollars today. Nvidia joined April 15, 2005; the same 1,000 dollars would now equal 1,232,139 dollars.

Stock Advisor overall average return stands at 906 percent, far ahead of the S&P 500 at 208 percent. Review the latest top 10 list via Stock Advisor and join a community of individual investors.

*Stock Advisor returns as of August 4, 2026.

JPMorgan Chase is an advertising partner of Motley Fool Money. Daniel Foelber holds Broadcom shares. The Motley Fool maintains positions in and recommends Alphabet, Amazon, Broadcom, Caterpillar, JPMorgan Chase, Micron Technology, Microsoft, Vanguard Growth ETF, Vanguard High Dividend Yield ETF, Vanguard S&P 500 ETF, and Vanguard Value ETF. The Motley Fool follows a disclosure policy.

The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.