Why the Vanguard Dividend Appreciation ETF Will Outperform

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 (NYSEMKT: VIG  ) has earned a respected four-star ranking.

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

VIG facts

Inception

April 2006 

Total Net Assets

$12.4 billion

Investment Approach

Seeks to track the performance of the Dividend Achievers Select Index, which consists of common stocks of companies that have a record of increasing dividends over time.

Expense Ratio

0.13%

1-Year / 3-year / 5-Year Annualized Returns

13.4% / 11% / 4.7%

Dividend Yield

2.4%

Alternatives

iShares Dow Jones Select Dividend Index (NYSEMKT: DYY  )
Vanguard High Dividend Yield Index ETF
(NYSEMKT: DVY  )
WisdomTree LargeCap Dividend
(NYSEMKT: DLN  )

Sources: Morningstar and Motley Fool CAPS.

On CAPS, 95% of the 277 members who have rated VIG believe the ETF will outperform the S&P 500 going forward.

Just last week, one of those Fools, All-Star rd80, tapped VIG as a particularly solid total-return opportunity:

Dividend growth stocks are my favorite type of investment. VIG offers an ETF full of them along with Vanguard's famous low fees. If I wasn't interested in owning individual stocks, this fund would probably be a core holding. Expect this to outperform in a soft market, but may lag in a strong up market.

Owning exceptional ETFs is a surefire way to secure your financial future. Of course, despite a strong four-star rating, VIG may not be your top choice.

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Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On January 09, 2013, at 11:52 AM, fool3090 wrote:

    Am a big fan of VIG (disclosure, long VIG). I sold some individual telecom shares last fall and invested in VIG as a core holding. I was way overweight on telecom and financials. VIG was a smart choice. The dividend rate is only so-so, but I wanted growth as a secondary consideration. DVY not only had higher fees, but the composition would have only created even more sector concentration in my portfolio. Bottom line, look at the companies and sectors in any ETF. Vanguard has a nifty comparison function on its site where you can look at its funds and competitors, measuring real return, sector, fees, etc. Also, for the defensive investor, compare how VIG stacked up to its contemporaries during the 2008 crisis to show how it responds to extraordinary market stress. Past performance is no predictor, of course. But it's another thing to consider. My 2 cents.

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