4-Star ETFs Poised to Pop: Vanguard Dividend Appreciation

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the Vanguard Dividend Appreciation ETF (NYSE: VIG  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Vanguard Dividend Appreciation and see what CAPS investors are saying about the ETF right now.

Vanguard Dividend Appreciation facts

Inception April 2006
Total Assets $8 billion
Investment Approach Seeks to track the performance of the Dividend Achievers Select Index, which includes U.S. stocks that have a history of increasing dividends for at least 10 consecutive years.
Expense Ratio 0.18%
Dividend Yield 2.1%
1-Year / 3-Year / 5-Year Annual Returns 6.9% / 12.6% / 2.4%
Top Holdings with High CAPS Rating (4 or 5 Stars) and Portfolio Weight McDonald's (NYSE: MCD  ) (4.4%)
Chevron (NYSE: CVX  ) (4.2%)
PepsiCo (NYSE: PEP  ) (4.1%)
Alternatives iShares Dow Jones Select Dividend (NYSE: DVY  )
WisdomTree LargeCap Dividend (NYSE: DLN  )

Sources: Morningstar and Motley Fool CAPS.

On CAPS, 95% of the 201 members who have rated Vanguard Dividend Appreciation believe the ETF will outperform the S&P 500 going forward. These bulls include jawilde and fellow Fool Brian Richards (TMFBrich).

Last year , jawilde tapped the ETF as a great way to play defense:

This ETF comprises stocks (mainly blue chips) that have increased their dividends for 10 years or more. It will lag in a roaring bull market but holds up better than the S&P in bear markets. Combination of steadily rising dividends with lower losses in a bear market should create a Total Return which beats the S&P.

Vanguard Dividend Appreciation even sports a cheap expense ratio of 0.18%. That's lower than that of other dividend ETFs like iShares Dow Jones Select Dividend (0.40%) and WisdomTree LargeCap Dividend (0.28%).

Brian elaborates on the bull case:

I think this is a good option for defensive-minded investors. Here's what I wrote about VIG on Aug. 5, 2011:

"... This low-cost ETF, with an expense ratio of just 0.18%, is suitable for conservative investors. It comprises 127 companies that have increased their regular annual dividend payments for at least 10 consecutive years. The ETF offers exposure to high-quality large-cap names, and allows nervous investors to sleep better. ...

The fund's top 10 holdings, which alone make up 40% of assets, are a who's-who of dividend-paying blue chips. ... At just more than 2%, the ETF's yield isn't overwhelming, but remember: Those payouts should grow over time."

What do you think about Vanguard Dividend Appreciation, or any other ETF for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional ETFs is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to track Vanguard Dividend Appreciation? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of McDonald's, Chevron, and PepsiCo, as well as creating a diagonal call position in PepsiCo. The Fool owns shares of PepsiCo. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 11, 2011, at 2:01 PM, elpollogrande wrote:

    Best long-term ETF out there. All the companies are solid and give global exposure at a very, very low cost.

  • Report this Comment On November 12, 2011, at 10:41 AM, vriguy wrote:

    I've about 35% of my equity position in VIG - it certainly helps me sleep well. I switched to it a couple of years back when I found that almost all the large cap companies I was buying as individual stocks were included. The convenience and time savings of not having to follow so many individual stocks more than compensates for the 0.18% expense ratio.

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9/19/2014 4:04 PM
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