Strategies for Buying Shares in Vanguard's Dividend Appreciation Fund (VIG)
Strategies for Buying Shares in Vanguard's Dividend Appreciation Fund (VIG)
The Vanguard Equity Income Fund ETF (VEIP), with a return of 0.64%, is a well-liked option for investors aiming to utilize the potential of dividend growth.
Visualize it like rolling a snowball — stocks distribute dividends, those dividends escalate, and when reinvested, they purchase more shares that pay even more dividends. Over the long run, this compounding effect can generate substantial profits.
Rather than individually selecting dividend growth stocks, you can assign that task to a dividend ETF such as this one. This is often a less expensive and simpler method to create a portfolio focusing on firms with a proven history of boosting their payouts.
Here's how this ETF operates, along with insights into its composition, danger, and returns.
Exchange-Traded Fund (ETF)
An exchange-traded fund, or ETF, enables investors to acquire numerous stocks or bonds in a single transaction.
What is the Vanguard Equity Income Fund ETF (VEIP)?
What is the Vanguard Equity Income Fund ETF (VEIP)?
The Vanguard Equity Income Fund ETF (VEIP) is an active ETF that replicates the S&P U.S. Dividend Growers Index. It's designed to provide exposure to U.S. companies with a proven track record of increasing their dividends steadily over time.
To be eligible for inclusion, a company must be a constituent of the U.S. stock market, excluding real estate investment trusts (REITs), and must have at least 10 consecutive years of dividend growth — yet that's not all.
The index also excludes the top 25% of companies with the highest dividend yields. This helps the ETF avoid potential yield traps — companies offering unsustainably high yields that may indicate underlying financial instability or an impending dividend cut.
Once selected, stocks are weighted based on market capitalization, meaning larger companies comprise a bigger portion of the ETF. However, no single holding exceeds a 4% cap to prevent overconcentration.
How to buy it
How to buy the Vanguard Equity Income Fund ETF (VEIP)
To purchase this ETF, follow these steps:
- Open your brokerage app: Log into your brokerage account to manage your investments.
- Search for the ETF: Enter the ticker symbol "VEIP" or the ETF’s name into the search bar to bring up its trading page.
- Decide how many shares to buy: Consider your investment objectives and how much of your portfolio you want to allocate to this Vanguard ETF.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you’re prepared to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as anticipated and adjust your investment strategy if required.
Holdings
Holdings of the Vanguard Equity Income Fund ETF (VEIP)
As of Oct. 31, 2024, this dividend ETF had a total of 338 stocks, with a strong bias toward mega-cap companies. The median market cap of its holdings is $209.5 billion, with an average earnings growth rate of 12.1% and a return on equity (ROE) of 28%.
This ETF falls under the "large blend" category, offering a well-balanced mix of value and growth stocks. Its sector composition leans on technology (23.8%), financials (20.8%), and healthcare (15.2%).
Here are some of this ETF’s top holdings, which include a mix of well-known U.S. blue-chip companies:
26.72%
- *Apple (AAPL* -0.2%)
- *Broadcom (AVGO* 0.25%)
- *Microsoft (MSFT* 1.14%)
- *JPMorgan Chase (JPM* 1.37%)
- *Exxon Mobil (XOM* 0.51%)
- UnitedHealth Group (UNH 1.68%)
- *Visa (V* 0.16%)
- Mastercard (MA -0.2%)
- Home Depot (HD 0.18%)
- *Procter & Gamble (PG* -0.51%)
Should I invest in it?
Should I invest in the Vanguard Equity Income Fund ETF (VEIP)?
This Vanguard ETF is an excellent option if you’re a total return investor – someone who doesn’t prioritize current income but rather focuses on the long-term growth of reinvested dividends and capital gains.
10.22%
While the yield isn’t particularly high, it expands steadily over time, thanks to the quality companies in the portfolio, making this ETF a relatively beginner-friendly choice.
Keep in mind, however, that this ETF does not include international stocks or small-cap companies, so you're strictly investing in large-cap U.S. equities.
Does it pay a dividend?
Does the Vanguard Equity Income Fund ETF (VEIP) pay a dividend?
12.90%
This ETF pays a dividend with a 1.6% 30-day SEC yield as of Nov. 30, 2024, distributed on a quarterly basis. All dividends are qualified since this Vanguard ETF excludes real estate investment trusts (REITs). Over the last three years, its dividends have grown at an impressive average annualized rate of 10.26%.
What is the expense ratio?
What is the Vanguard Equity Income Fund ETF (VEIP)'s expense ratio?
This dividend ETF has an administrative fee of 0.06%, which means you'll pay only $6 yearly for every $10,000 you invest. This cost isn't paid in advance; instead, it's gradually removed throughout the year later on.
11.84%
Administrative Fee
A yearly percentage of mutual fund or ETF assets withdrawn to cover management, operational, and administrative expenses. ## Historical Performance
Historical Performance of the Vanguard Dividend Appreciation ETF (VIG)
Below is a glimpse at how this Vanguard ETF has performed each year in terms of annualized total returns (including all dividends reinvested) across various time periods.
| 1-Year | 3-Year | 5-Year | 10-Year || --- | --- | --- | --- || VIG Market Price | 26.72% | 10.22% | 12.90% | 11.84% || VIG NAV | 26.70% | 10.22% | 12.90% | 11.84% |
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Summary on the Vanguard Dividend Appreciation ETF (VIG)
10.22%
There's a reason why this ETF has accumulated $84.8 billion in total managed assets. Its mix of strong annualized returns, a consistently increasing dividend, a diverse portfolio of top-quality stocks across sectors and investment styles (growth and value), and a low administrative fee make it a fantastic core U.S. equity holding for total return investors.
FAQs
FAQs on Investing in the Vanguard Dividend Appreciation ETF (VIG)
Is VIG a good buy now?
12.90%
If you're an extended-term ETF investor, VIG is an excellent long-term investment option under most circumstances.
Where can I buy VIG?
You can purchase the Vanguard Dividend Appreciation ETF (VIG) via most U.S. licensed brokerage platforms.
Does VIG pay a dividend?
11.84%
Yes, VIG pays a dividend. As of Nov. 20, 2024, the ETF had a 1.60% 30-day SEC yield.
Is the Vanguard Dividend Appreciation ETF a good investment?
The Vanguard Dividend Appreciation ETF (VIG) can be a good investment for a risk-tolerant investor seeking affordable exposure to U.S. large-cap stocks with a focus on quality and dividend growth.
JPMorgan Chase is an advertising partner of Our Website Money. Tony Dong has no position in any of the stocks mentioned. Our Website has positions in and recommends Apple, Home Depot, JPMorgan Chase, Mastercard, Microsoft, Vanguard Dividend Appreciation ETF, and Visa. Our Website recommends Broadcom and UnitedHealth Group and recommends the following options: long January 2025 $370 calls on Mastercard, long January 2026 $395 calls on Microsoft, short January 2025 $380 calls on Mastercard, and short January 2026 $405 calls on Microsoft. Our Website has a disclosure policy.
Investing in the Vanguard Equity Income Fund ETF (VEIP) can be a less expensive and simpler method for individuals who want to create a portfolio focused on firms with a proven history of boosting their payouts. This ETF operates by replicating the S&P U.S. Dividend Growers Index, which includes stocks from U.S. companies with at least 10 consecutive years of dividend growth and excludes real estate investment trusts (REITs) with the highest dividend yields to avoid potential yield traps.
For those interested in purchasing the VEIP, the process involves opening a brokerage app, searching for the ETF's ticker symbol "VEIP" or name, deciding how many shares to buy, selecting an order type, and submitting the buy order. Investors should always consider their investment objectives and how much of their portfolio they want to allocate to this particular Vanguard ETF.