Quick Read
VIG Focuses on Quality Dividend Growers: The ETF’s index methodology requires 10 consecutive years of dividend growth while filtering out many potential yield traps.
Low Fees Are a Major Advantage: With a 0.04% expense ratio, VIG remains one of the cheapest quality-focused dividend ETFs available.
The Goal Is Total Return, Not Yield Chasing: VIG’s relatively modest yield comes alongside strong long-term compounding and lower concentration risk than many tech-heavy market indexes.
The analyst who called NVIDIA in 2010 just named his top 10 stocks and Vanguard Dividend Appreciation ETF wasn’t one of them. Get them here FREE.
The analyst who called NVIDIA in 2010 just named his top 10 stocks and Vanguard Dividend Appreciation ETF wasn’t one of them. Get them here FREE.
If you are looking for investing discussion a little more sophisticated than what you typically find on Reddit, I would suggest checking out the Bogleheads forum. It is populated largely by adherents of John C. Bogle and his philosophy around low-cost index investing. While individual portfolio implementations differ, the core principles tend to stay the same: keep fees low, diversify broadly, and stay the course.
Naturally, that also makes Bogleheads fairly skeptical of a lot of modern alternative investment products. Most are not fans of covered call ETFs because systematically selling upside can drag on long-term total returns. They also tend to dislike many buffer ETFs because of their higher fees and more complex payoff structures. And generally speaking, most Bogleheads are not particularly enthusiastic about dividend investing either.
There are a few exceptions, though. One of the rare dividend ETFs that tends to get relatively positive reception from that crowd is the Vanguard Dividend Appreciation ETF (NYSEARCA: VIG). Here’s why VIG stands out, even for these die-hard passive investors.
What Is VIG?
VIG is a passive ETF that tracks the S&P U.S. Dividend Growers Index. The primary screen requires companies to have at least a 10-year history of consecutive dividend growth, which immediately creates a quality tilt within the portfolio. On top of that, the methodology applies another important filter: it excludes the top 25% highest-yielding companies.
That might sound counterintuitive at first for a dividend ETF, but it actually serves a very useful purpose. By removing the highest-yielding quartile, VIG sidesteps many potential yield traps, which are companies whose dividend yields look elevated largely because their stock prices have collapsed due to deteriorating business fundamentals.
