This Vanguard investment fund allocates approximately a quarter of its resources towards tech-related stocks, potentially aiding in the creation of prolonged passive earnings.
The tech sector has outshone the S&P 500 in the past three, five, and 10 years, with tech giants like Apple, Nvidia, Microsoft, and Broadcom leading the charge. Investors flock to these stocks for their growth potential, but what if there was an exchange-traded fund (ETF) that offered tech stocks with high dividend yields? Enter the Vanguard Dividend Appreciation ETF (VIG), a low-cost option with a growth-focused approach and a dividend yield superior to the S&P 500.
Leveraging growth and income
The Vanguard Dividend Appreciation ETF, with its 0.06% expense ratio and over 330 holdings, offers a cost-effective way to diversify your portfolio while focusing on companies growing their earnings and dividends. The fund boasts a P/E ratio of about 25 and a dividend yield of 1.7%, surpassing the S&P 500's P/E of 27 and yield of 1.2%.
Despite its emphasis on growth stocks, VIG doesn't overlook income generation. Companies with a history of dividend growth see their dividends as additional incentives for long-term investment, making the Dividend Appreciation ETF a brilliant balance of growth and income potential.
Empowering select sectors
Over 83% of the ETF's investments are centered on five sectors: technology, financials, healthcare, industrials, and consumer staples. This concentration is not due to an overlap in operations but rather the propensity of leaders in these sectors to pass on profits through dividends.
Tech veterans like Apple and Microsoft, along with financial titans such as JPMorgan and JPMorgan Chase, have been consistently raising their dividends, each achieving more than a decade of consecutive increases. Similarly, the industrial sector's dividend stalwarts like Caterpillar and Lockheed Martin continue to enhance their dividend payouts.
Healthcare and consumer staples, with giants like Costco Wholesale and Procter & Gamble as prominent holdings, contribute 26% of the fund's allocation. These sectors demonstrate a strong resilience to economic cycles, making them reliable dividend raisers regardless of market conditions.
The Vanguard Dividend Appreciation ETF is an attractive option for investors seeking a diversified portfolio emphasizing quality businesses with a robust growth and income outlook. Its blend of growth potential and dividend yield makes it a worthwhile consideration in today's investment climate.
If you're considering allocating part of your investment portfolio to finance opportunities that offer both growth and income, the Vanguard Dividend Appreciation ETF could be an excellent choice. With this ETF, you're not only investing in the technology sector's giants like Apple and Microsoft, but you're also gaining exposure to other robust sectors like healthcare, financials, and consumer staples. These sectors have shown a consistent track record of raising dividends, offering you a reliable source of income along with a potential for growth.
