Vanguard Fund Features Dividend Dynamos

This week???s ETF Talk features Vanguard Dividend Appreciation ETF (VIG), a well-known and large exchange-traded fund (ETF) with $20.3 billion in assets under management as of Oct. 31. With an expense ratio of 0.10%, VIG operates at less than 9% of the cost of an average fund with similar holdings.

VIG, a low-expense-ratio Vanguard ETF, tracks the performance of an index that measures the investment return of common stocks that increase their dividends over time. The fund aims to follow the proportional weightings of this index as closely as possible. Stocks must have increased their dividends for at least 10 years in a row to be considered for inclusion in the index.

VIG has risen 7.14% this year, rebounding from falls in January, July and October. In addition, this fund offers a 1.93% dividend yield.


VIG invests in several sectors, but its most heavily weighted sectors are industrials, 23.20%; consumer defensive, 20.66%; and healthcare, 13.76%. VIG???s top 10 largest holdings possess 36.74% of its assets. The five largest of these positions are Johnson & Johnson (JNJ), 4.46%; The Coca-Cola Company (KO), 4.30%; Pepsico, Inc. (PEP), 4.18%; Wal-Mart Stores, Inc. (WMT), 3.95%; and International Business Machines (IBM), 3.95%.

Analysts consider rising dividends to be a good indicator of a company???s strength. Even if a stock is sitting still in terms of its price, such increasing dividend payments can provide a lucrative flow of income. If companies with a strong history of dividends interest you, Vanguard Dividend Appreciation ETF (VIG) could be an inexpensive way to invest in those dividend dynamos.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about Vanguard’s S&P 500 fund. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.