A 980 nm bottom-emitting vertical-cavity surface-emitting laser (VCSEL) with a p-contact diameter is reported to achieve high power and good beam quality. A numerical simulation is conducted on the current spreading in a VCSEL with oxidation between the active region and the p-type distributed Bragg reflector. It is found that, for a particular oxide aperture diameter, somewhat homogeneous current distribution can be achieved for a VCSEL with an optimized p-contact diameter. The far-field divergence angle from a 600 microm diameter VCSEL is suppressed from 30 degrees to 15 degrees, and no strong sidelobe is observed in the far-field pattern by using the optimized p-contact diameter. There is a slight rise in threshold and optical output power that is due to the p-contact optimization. By improving the device packaging method, the maximum optical output power of the device is 2.01 W.