Receiving dividends is great — but what if you could invest in companies that consistently increase their dividends year after year?
That’s exactly what the VIG ETF (Vanguard Dividend Appreciation ETF) is designed for.
VIG focuses on companies with a strong track record of dividend growth, offering a balanced approach to both income and long-term capital appreciation.
In this post, we’ll break down VIG’s structure, benefits, risks, investment strategies, and how it compares to other popular dividend ETFs like SCHD.
What Is VIG?
VIG stands for the Vanguard Dividend Appreciation ETF.
It invests in U.S. companies that have increased their dividends for at least 10 consecutive years.
Unlike traditional high-yield dividend ETFs, VIG prioritizes consistency and growth over raw yield.
Key Information
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ETF Name: Vanguard Dividend Appreciation ETF (VIG)
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Issuer: Vanguard
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Index Tracked: S&P U.S. Dividend Growers Index
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Inception Date: April 21, 2006
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Expense Ratio: 0.06%
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Assets Under Management (AUM): Over $100 billion
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Dividend Frequency: Quarterly
Top Holdings in VIG (as of 2024)
| Company | Sector |
|---|---|
| Microsoft (MSFT) | Technology |
| UnitedHealth (UNH) | Healthcare |
| Visa (V) | Financials |
| Johnson & Johnson (JNJ) | Healthcare |
| PepsiCo (PEP) | Consumer Goods |
| Home Depot (HD) | Consumer Goods |
| Procter & Gamble (PG) | Consumer Staples |
👉 These are large-cap, blue-chip companies with proven dividend growth records.
Advantages of VIG
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Focus on dividend growth, not just yield
This leads to stronger long-term compounding and lower payout risk. -
Quality, large-cap companies
Reduces volatility and adds defensive characteristics to your portfolio. -
Low expense ratio (0.06%)
One of the cheapest actively managed dividend ETFs on the market. -
Perfect for long-term investing
Suitable for retirement, education savings, or any compounding strategy. -
Better downside protection
Dividend growers tend to outperform in bear markets due to financial discipline.
Drawbacks of VIG
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Lower current yield (around 2%)
Investors seeking immediate income may prefer higher-yield ETFs like SCHD or VYM. -
Less exposure to high-growth sectors
While stable, these companies may not deliver explosive returns. -
Automatic exclusion of non-growers
Companies that cut or freeze dividends are removed, leading to turnover.
VIG vs SCHD – What’s the Difference?
| Feature | VIG | SCHD |
|---|---|---|
| Dividend Focus | Dividend “growth” | High “current yield” |
| Average Yield | ~1.8%–2.2% | ~3%–4% |
| Sector Tilt | Tech, Healthcare | Financials, Industrials, Energy |
| Expense Ratio | 0.06% | 0.06% |
| Growth Profile | Higher long-term growth focus | More conservative, value-based |
👉 VIG = Consistent dividend growers
👉 SCHD = High-yield value stocks
Who Should Consider Investing in VIG?
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Long-term investors looking for reliable dividend growth
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Those who want both stability and moderate appreciation
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People building retirement or education portfolios
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Anyone seeking a low-cost, quality-focused ETF
Final Thoughts: VIG – A Blueprint for Long-Term Dividend Growth
The VIG ETF is one of the most reliable ways to invest in
companies that not only pay dividends — but increase them consistently.
While the yield may be lower than other dividend ETFs,
VIG shines in its ability to deliver:
✅ Strong long-term returns
✅ Dividend stability
✅ Portfolio diversification and downside resilience
For investors who care about compounding and capital preservation,
VIG is a solid core holding worth serious consideration.
"This post is not a buy or sell recommendation, but an introduction to the ETF/stock."
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