The Vanguard Dividend Appreciation ETF (VIG) is a prominent exchange-traded fund that offers investors exposure to U.S. companies with a consistent history of increasing dividends. This ETF is designed for those seeking a blend of income and potential capital appreciation through investments in financially robust companies.
Fund Objective and Strategy
VIG aims to replicate the performance of the S&P U.S. Dividend Growers Index, which comprises U.S. stocks that have increased their dividends for at least 10 consecutive years. By focusing on such companies, the fund emphasizes stability and a commitment to returning value to shareholders. The ETF employs a full-replication approach, ensuring it remains fully invested in the constituent stocks of the index.
Key Facts and Statistics
- Inception Date: April 21, 2006
- Expense Ratio: 0.06%
- Dividend Yield: Approximately 1.7%
- Number of Holdings: Over 300
- Assets Under Management: Approximately $106 billion
Data as of January 21, 2025
Performance Overview
As of January 23, 2025, VIG is trading at $202.41, reflecting a 0.66% increase from the previous close. Over the past year, the ETF has delivered a total return of approximately 18.7%, with a three-year annualized return of 10.1% and a five-year annualized return of 11.4%.
Dividend Growth
VIG focuses on companies with a strong track record of dividend growth. Over the past three years, the ETF’s dividends have increased at an average annual rate of 10.26%, underscoring its emphasis on companies committed to returning value to shareholders.
Sector Allocation
The ETF maintains a diversified portfolio across various sectors:
- Technology: 26.85%
- Financial Services: 21.63%
- Healthcare: 14.05%
- Consumer Defensive: 11.33%
- Industrials: 10.69%
- Consumer Cyclical: 6.23%
- Basic Materials: 3.33%
- Energy: 2.96%
- Utilities: 2.12%
- Communication Services: 0.80%
Data as of May 31, 2024
Top Holdings
As of May 31, 2024, VIG’s top holdings include:
- Apple Inc. (AAPL): 4.17%
- Microsoft Corporation (MSFT): 4.01%
- JPMorgan Chase & Co. (JPM): 3.41%
- Broadcom Inc. (AVGO): 3.40%
- Exxon Mobil Corp. (XOM): 3.11%
These holdings reflect the fund’s focus on large-cap companies with a history of dividend growth.
Investment Considerations
VIG is suitable for investors seeking exposure to U.S. companies with a proven track record of dividend growth. Its low expense ratio of 0.06% makes it an attractive option for cost-conscious investors. However, it’s essential to note that the ETF’s dividend yield is relatively modest at around 1.7%, which may not appeal to those seeking higher immediate income. Additionally, the fund’s focus on large-cap U.S. equities means limited exposure to international or small-cap stocks.
Conclusion
The Vanguard Dividend Appreciation ETF (VIG) offers a compelling investment opportunity for those interested in companies with a consistent history of dividend growth. Its diversified portfolio, low expense ratio, and focus on financially stable companies make it a solid choice for long-term investors aiming for both income and capital appreciation.
Please note that all investments carry risks, including the potential loss of principal. It’s advisable to consult with a financial advisor before making investment decisions.
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