“We believe that this is because many of the stocks in the S&P 500 that have relatively high dividend yields also have somewhat weak financial positions and lack a long track record of dividend increases, and therefore would not be included in this ETF,” Benway said. “Nevertheless, VIG focuses on companies that deliver dividend growth, and on that measure the fund has a solid track record, in our view.”
From its inception in 2007, VIG has provided a compound annual growth rate in dividends of 7.6%. Additionally, the fund has a five-year beta of 0.82, which makes it less volatile than the market average.
Vanguard Dividend Appreciation Index ETF
For more information on dividend funds, visit our dividend ETFs category.
Max Chen contributed to this article.