The VIG ETF only charges a 0.06% expense ratio. Figure 5 – VIG Dividend Growth Rate (Seeking Alpha) FeesĪs with all Vanguard funds, one of the main selling points of the VIG ETF is its low costs. It’s latest distribution of $0.715 / share was paid on September 22. VIG’s distribution is paid quarterly and is variable. The fund’s distribution has grown at a 5Yr CAGR of 8.1% (Figure 5). The VIG ETF pays a moderate distribution yield of 2.0%, slightly above the market’s 1.7%. Figure 4 – VIG Returns () Distribution & Yield The S&P 500 has returned 8.2%/9.2%/11.7% over the same time frame. However, relative to the market, as measured by the S&P 500 Index, it has lagged slightly on the 3 and 10Yr mark. The VIG ETF has delivered solid long-term returns with 3/5/10 Yr average annual returns of 6.1%, 9.4%, and 10.7% respectively to Septem(Figure 4). Figure 3 – VIG Top 10 Positions () Returns This anomaly is because the index methodology caps individual weights at 4% and MSFT has underperformed UNH and JNJ since the last quarterly rebalancing. Interestingly, MSFT is only the 3rd largest weight at 3.73%, despite its market cap of $1.8 trillion being far higher than UNH’s $500 billion market cap and JNJ’s $443 billion market cap. The top 10 positions of VIG constitute 29.5% of the fund and are dominated by household names such as Microsoft Corp. Readers can read my articles on the SCHD ETF, the VYM ETF, and other dividend-focused ETFs to see how they compare to one another.įigure 2 – VIG Sector Allocation () SCHD also has a higher distribution yield growing at a faster pace. Dividend Equity ETF ( SCHD) overall, as it has the highest historical returns with a sensible strategy that balances dividend yield with financial strength. While the VIG ETF is a solid dividend growth fund on its own, I prefer the Schwab U.S. However, VYM has performed better in the past 2 years due to its higher energy exposure. Overall, the VIG ETF has better long-term total returns and risk metrics. While both funds target dividend paying companies, the VIG ETF focuses on companies that have consistently grown their dividends, whereas the VYM is focused on companies with the highest dividend yields. It has subtle but important differences to the Vanguard High Dividend Yield ETF ( Original Post> The Vanguard Dividend Appreciation ETF (NYSEARCA: VIG) is Vanguard’s offering in the dividend growth category. Vanguard Dividend Appreciation ETF: Good But SCHD Is Superior | Seeking Alpha VIG compares well to peer funds (2nd highest 5Yr CAGR returns in its peer group and 2nd highest Sharpe Ratio). It has a 5-Yr average annual return of 9.4% with a 2.0% distribution yield. The VIG ETF gives investors exposure to companies that have a history of growing dividends.
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