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."

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