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VIG’s 6.6% Yield on Cost Puts Dividend Strategy Trade‑Offs in Focus

The case shows how dividend‑growth funds can turn low starting yields into larger income over time.

Overview

  • Early buyers of Vanguard Dividend Appreciation ETF now collect a reported 6.6% yield on their original price as the fund’s annual payout rose from about $0.71 to roughly $3.30 per share.
  • Morningstar awarded the fund a Gold rating, with analyst Bryan Armour praising its low cost and repeatable, market‑cap‑weighted approach.
  • A head‑to‑head look with iShares Core High Dividend ETF shows VIG’s lower current yield near 1.7% versus HDV’s about 3%, reflecting different income goals.
  • HDV owns about 75 stocks compared with roughly 334 for VIG, making HDV more concentrated and VIG broader across sectors and names.
  • Over the past decade, VIG’s 12.9% annualized return topped HDV’s 9.4%, helped by VIG’s tilt to mega‑cap tech, even though its top holdings yield less than 1%.