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Vanguard offers a variety of ETFs known for their low fees – and these two particularly stand out right now.
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The Vanguard Dividend Appreciation ETF contains more tech stocks than many traditional dividend ETFs.
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The Vanguard Total International Stock ETF provides exposure to developed and emerging markets.
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10 stocks we like better than the Vanguard Dividend Appreciation ETF ›
Vanguard is one of the largest producers of exchange-traded funds (ETFs) worldwide, with over 80 available. Some of its ETFs – such as Vanguard S&P 500, Vanguard Growth ETFAnd Vanguard Total Stock Market ETF — commonly invested in, but there are others that fly under the radar Vanguard ETF these can be great additional items in a portfolio. Let’s look at two such ETFs with unique objectives that could justify splitting $1,000 between them.
While some dividend ETFs favor companies offering high dividend yields, the Vanguard Dividend Appreciation ETF (NYSEMKT:VIG) prioritizes companies that have consistently increased their annual dividend payout. To be included in the VIG, a company must have increased its dividend for 10 consecutive years and not be among the top 25% of eligible companies. This last requirement helps you avoid performance pitfalls.
VIG’s dividend yield is a modest 1.6%, which is lower than other popular dividend ETFs. However, investing in VIG is not about current returns; it’s about playing for the long term. You invest with the expectation that your payout will be much higher in the years to come.
Many of VIG’s top stocks have below-average dividend yields, but have consistently increased their dividends and offer growth. And income opportunities. Here are five examples:
|
Business |
ETF Percentage |
Dividend yield |
Consecutive years of dividend increases |
|---|---|---|---|
|
Broadcom |
6.66% |
0.69% |
15 |
|
Microsoft |
4.41% |
0.74% |
23 |
|
Apple |
4.15% |
0.40% |
14 |
|
Visa |
2.54% |
0.74% |
17 |
|
Walmart |
2.25% |
0.79% |
52 |
Table by author. Dividend yield as of market open on January 19. Percentages of ETFs as of December 31.
With VIG, you get exposure to many more tech and growth stocks than other traditional dividend ETFs.
It’s generally a good idea to include some international stocks in your portfolio to protect against potential challenges in the U.S. economy. That’s why I’m a fan of Vanguard Total International Equity ETF (NASDAQ:VXUS). It contains companies from both developed and emerging markets, allowing you to take advantage of what both offer.
Developed markets generally have established industries, mature financial markets, and infrastructure that supports reliable economic growth (think: the United States, Germany, Japan, the United Kingdom, and Australia). Emerging markets are experiencing rapid growth and industrialization, but still lack infrastructure and regulatory oversight (think China, Brazil, Mexico, and India). Here is how a $500 investment would be distributed between regions:
