Vanguard Dividend Appreciation ETF Outperforms Competitors

Investors considering income investments can benefit from the Vanguard Dividend Appreciation ETF's focus on dividend growth while still offering potential for capital appreciation, according to a recent analysis.

Date: 12-01-2025

AI Rating: 7

Overview of Vanguard Dividend Appreciation ETF
The Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) is centered on dividend growth, holding only stocks with a strong history of increasing dividends. It mirrors the S&P U.S. Dividend Growers Index and primarily features large-cap stocks like Apple, JPMorgan Chase, and Microsoft.

Earnings Potential Insight
Currently, the ETF's average trailing dividend yield is 1.7%. While there are competing ETFs with higher yields, such as the iShares Core Dividend Growth ETF at 2.1% and the ProShares S&P 500 Dividend Aristocrats® ETF at 2.2%, the Vanguard ETF boasts better total returns over time.

Market Performance Overview
Over the last decade, the Vanguard Dividend Appreciation ETF has outperformed the Dividend Aristocrats® fund, showcasing strong performance metrics. The report indicates that stocks that initiate or raise dividends typically exhibit strong fundamentals and can provide more significant capital appreciation compared to non-dividend payers.

Dividends and Growth Correlation
The report highlights that companies within this ETF showing consistent dividend growth also have demonstrated quality business plans leading to net average annual returns of over 10% since 1973. This contrasts with companies that do not pay dividends, which returned approximately half that amount.

Investment Recommendation Summary
The analysis emphasizes that while other ETFs provide higher immediate income, the Vanguard Dividend Appreciation ETF remains a strong contender for investors looking for growth and inflation protection over the long term.

Stocks: AAPL JPM MSFT NVDA AMZN GOOGL VIG