Vanguard Dividend Appreciation ETFVIG

Morningstar Rating

ETF Research and Analysis

by Samuel Lee

Suitability
Vanguard Dividend Appreciation ETF VIG focuses on firms that have raised dividends for at least 10 years straight. The fund's index provider, Mergent, weeds out firms that fail its financial strength screens. Unfortunately, Read more

Bull Case

Dividends serve as a strong constraint on managerial misbehavior, deterring destructive empire building.

The fund focuses on large profitable U.S. companies with strong competitive advantages, producing a fairly well-diversified portfolio of stability and quality.

The large profit margins, relatively stable revenues, and low leverage of the companies in this portfolio make it well suited to surviving a protracted economic slump while awaiting recovery. Read more

Bear Case

There is a bit of "black-box" methodology to this fund, as the benchmark's criterion for screening stocks for dividend growth sustainability is a secret.

Despite having the word dividend in its name, this is not intended to be a current-income fund. It looks for sustainable and growing yields that pay off tomorrow, rather than high yields today.

The quality of these businesses is no secret, and their shares frequently command a premium valuation relative to their more vulnerable counterparts. Read more