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.
Get Kiplinger Today newsletter — free
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.
-
Affordability Crisis: Floridia Votes to Increase Property Tax Break
State Tax Property taxes have skyrocketed nearly 60% within the last five years in Florida, and its constituents are finally doing something about it.
By Gabriella Cruz-Martínez Published
-
Average Net Worth by Age: How Do You Measure Up?
Financial advisors discuss the secrets to growing your net worth over time.
By Adam Shell Published
-
Why Is Warren Buffett Selling So Much Stock?
Berkshire Hathaway is dumping equities, hoarding cash and making market participants nervous.
By Dan Burrows Published
-
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.
By Dan Burrows Published
-
Warren Buffett Adores Apple as Much as Ever
Berkshire Hathaway trimmed its Apple stake because taxes are "likely" to go up "later."
By Dan Burrows Published
-
Warren Buffett Stocks: A Look at Berkshire Hathaway's Holdings
Warren Buffett's holdings are a diverse set of blue chips and lesser-known growth bets. Here, we look at Buffett's stock picks, as well as those of his lieutenants.
By Dan Burrows Last updated
-
6 Best Books on Investing
investing These six books will help you be a better investor.
By Coryanne Hicks Last updated
-
Dividends Are in a Rut
Dividends may be going through a rough patch, but income investors should exercise patience.
By Jeffrey R. Kosnett Published
-
4 Stocks Warren Buffett Is Buying (and 7 He's Selling)
Warren Buffett Berkshire Hathaway is paring Apple and ordering up Domino's, among other moves.
By Dan Burrows Last updated
-
Warren Buffett Advice: Why You Should Pick Businesses, Not Stocks
Can you beat the averages? Warren Buffett can. What can mere mortals learn from his success?
By James K. Glassman Published