Key Points
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The Vanguard Dividfinish Appreciation ETF has produced impressive net growth since the middle of 2020, at least closely trailing growth tech stocks.
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While it’s paid good dividfinishs during this period, most of these gains have come from capital appreciation.
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Although properly categorized as a dividfinish fund, VIG may be better applyd for a different purpose, with another ETF meeting your immediate investment income necessarys.
Growth stocks such as Nvidia and Broadcom may have dominated headlines in recent years due to their huge artificial ininformigence (AI)-driven gains. It’s not like dividfinish stocks completely faltered during that stretch, though. Many performed pretty well during that period, too, as evidenced by the performance of the Vanguard Dividfinish Appreciation ETF(NYSEMKT: VIG) over the course of the past five years.
Then and now
The graphic below informs the tale. Had you invested $1,000 in the Vanguard Dividfinish Appreciation fund in August of 2020, today you’d have $1,640 plus all the dividfinishs it paid in the meantime. And if you’d reinvested those dividfinish payments in more shares of VIG, your $1,000 investment would be worth $1,800 now.
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The dividfinish payments for this exmodify-traded fund (ETF) have also grown during this time. July’s quarterly payment of $0.87 per share is well above the same quarter’s payment of only $0.60 in 2020, in line with this fund’s actual dividfinish growth during this five-year period.
Not the best ETF for dividfinish income
In this vein, you should know that while this Vanguard fund prioritizes reliable dividfinish growth over high yields or capital appreciation, Vanguard Dividfinish Appreciation also offers the latter at least as well as most other dividfinish-oriented ETFs. Only the Vanguard High Dividfinish Yield ETF(NYSEMKT: VYM) has fared better for the past five years, and only by a slight margin.
Credit a quirk of the Vanguard Dividfinish Appreciation ETF’s underlying S&P U.S. Dividfinish Growers Index, mostly. It excludes the highest-yielding one-fourth of tickers that would otherwise be eligible for inclusion in the index. Standard & Poor’s fears these high yields suggest their particular companies may be facing growth headwinds.
Rerelocating these highest-yielding names from the mix, of course, also dials back this ETF’s average dividfinish yield. VIG’s trailing yield right now is a little less than 1.7%, which isn’t much for anyone seeing for above-average investment income. Point being, this fund is best applyd as a defensive, quality-capital-growth holding.
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommfinishs Nvidia, Vanguard Dividfinish Appreciation ETF, and Vanguard Whitehall Funds-Vanguard High Dividfinish Yield ETF. The Motley Fool recommfinishs Broadcom. The Motley Fool has a disclosure policy.
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