With 2025 in the bottom of the ninth inning, savvy investors are looking to get a leg up on 2026 by evaluating stocks and exchange-traded funds (ETFs) that could be winners in the new year. The Vanguard International Dividend Appreciation ETF (VIGI +0.23%) may be an example of a 2026 winner that should be purchased today.
If its name sounds familiar, that may be because it's the international counterpart to the more famous Vanguard Dividend Appreciation ETF (VIG +0.16%), the largest ETF in the category. The international version of the ETF steals a page from the leader's playbook in that it, too, will only add stocks to its portfolio that have a dividend-hiking streak of a certain length. In this case, it's seven consecutive years of payout increases.
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That's a barrier to entry, but it's one that works in investors' favor because it ensures the international ETF leans into quality stocks with the ability to sustain and grow payouts, not yield traps. Potentially enhancing the allure of this Vanguard ETF for income investors is that international companies with established track records of payout growth likely are increasing their profitability, too.
Speaking of rising profits, that's one reason why international stocks are outpacing U.S. stocks this year. Europe is one of the epicenters of a profitability resurgence, and this international ETF taps into that theme. European stocks represent 41.9% of the portfolio.
NASDAQ: VIGI
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Japan, which accounts for 29.3% of the ETF's weight, has also been a hive of bullish earnings revisions recently. Adding to that good news, most sectors in Japan and the U.K. -- two of the top four countries by weight in the portfolio -- are still discounted relative to their historical medians.
Speaking of value, this dividend ETF has it. Its annual fee of 0.1% ($10 on a $10,000 position) is one of the lowest in its category, making it a cost-effective way to get exposure to the international equity renaissance.