An ETF for Rising Dividends
You'll find a load of household names in this Vanguard fund.

Investors are enamored with the strategy of buying stocks with ever-increasing payouts. So it's no surprise that Vanguard Dividend Appreciation ETF has become the largest dividend-oriented exchange-traded fund. As its name suggests, Dividend Appreciation invests in companies with a history of regular distribution boosts. "Most ETFs try to entice investors with the largest dividend yields," says Jim Rowley, an analyst at Vanguard. "With VIG, that’s not the goal. It strives for consistent dividend growth."
The ETF tracks the Dividend Achievers Select index, a subset of Mergent’s Broad Dividend Achievers index that was created for Vanguard. The Broad index contains nearly 200 companies that have hiked their payouts at least once a year over the past decade. The aim of the Select index is to identify companies in the Broad index that are likely to continue to boost dividends. The Select index also excludes real estate investment trusts, which are found in the Broad index. Dividend Appreciation “fully replicates” the Select index, says Rowley.
The portfolio tilts heavily toward consumer-oriented firms, such as McDonald’s and Target. But the stakes in financial and health care stocks, 7% each, are much smaller than those in other big-company blend funds (those that invest in stocks with a blend of growth and value attributes). Over the past year, the ETF beat the average large-company blend fund by one percentage point.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

-
‘I Play Pickleball in Retirement.’ Is It HSA-Eligible?
Retirement Tax Staying active after you retire may be easier with these HSA expenses. But there’s a big catch.
-
What New Tariffs Mean for Car Shoppers
The Kiplinger Letter Car deals are growing scarcer. Meanwhile, tax credits for EVs are on the way out, but tax breaks for car loans are coming.
-
I'm an Investing Expert: This Is How You Can Invest Like Warren Buffett
Buffett just invested $15 billion in oil and gas, and you can leverage the same strategy in your IRA to potentially generate 8% to 12% quarterly cash flow while taking advantage of tax benefits that are unavailable in any other investment class.
-
7 Essential Investing Rules We All Should Know
The best time to start investing is right now. That's just one vital rule investors should be familiar with. Here are six more.
-
What Is the Buffett Indicator?
"It is better to be roughly right than precisely wrong," writes Carveth Read in "Logic: Deductive and Inductive." That's the premise of the Buffett Indicator.
-
Why Is Warren Buffett Selling So Much Stock?
Berkshire Hathaway is dumping equities, hoarding cash and making market participants nervous.
-
Bank of America Stock Falls As Warren Buffett Keeps Selling
Bank of America stock is lower Wednesday on news Warren Buffett's Berkshire Hathaway sold another chunk of its stake in the bank. Here's what you need to know.
-
7 Stocks Warren Buffett Is Buying (and 10 He's Selling)
Warren Buffett Warren Buffett's Berkshire Hathaway sold Apple and Snowflake but picked up Ulta Beauty and Heico, among other moves in Q2.
-
Why Did Warren Buffett Slash His Stake in Apple Stock?
Warren Buffett's Berkshire Hathaway dumped Apple, its top stock, by almost half.
-
Warren Buffett Adores Apple as Much as Ever
Berkshire Hathaway trimmed its Apple stake because taxes are "likely" to go up "later."