Exchange Traded Funds (ETFs)

Invest in High-Yield Companies with This Fund

The Vanguard Dividend Appreciation Index Fund (NYSEARCA:VIG) seeks to track the performance of a benchmark index aimed at matching the return of common stocks for companies that increase their dividends over time.

VIG primarily focuses on dividend growth. The fund specifically selects U.S.-listed firms that have increased their dividend payments for the past 10 years, while excluding the top 25% highest-yielding companies based on indicated annual dividend yield (IAD).

This results in a portfolio that typically carries a relatively high yield. Holdings are market-cap weighted with individual security weights capped at 4%. The index reconstitutes annually.

Overall, VIG’s investment strategy provides a sustainable growth play based on dividends.

Chart courtesy of www.StockCharts.com

The adviser employs an indexing investment approach designed to track the performance of the index, which consists of common stocks for companies that have a record of raising dividends. The adviser attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index. Each stock is held in approximately the same proportion as its weighting in the index.

The fund has an average weighted market cap of $256 billion and a 1.95% distribution yield. Its average spread is 0.02%. The ETF has 288 holdings and an expense ratio of 0.06%, meaning it is relatively inexpensive to hold in relation to other exchange-traded funds.

However, as with any opportunity, potential investors should conduct their own due diligence in deciding whether or not this fund fits their own individual investing needs and portfolio goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.