Better Growth Play: Eli Lilly vs. Vanguard Growth Index Fund ETF Shares

Summary of Key Points Core Viewpoint - Large-cap U.S. stocks, particularly Eli Lilly and the Vanguard Growth Index Fund ETF, have shown significant growth in 2024, with Eli Lilly's shares rising nearly 60% and the Vanguard ETF gaining 25% [1]. Eli Lilly - Eli Lilly's stock trades at 68 times forward earnings, indicating high investor expectations for growth [2]. - The company has a low dividend yield of 0.58% but has increased its dividend by over 15% annually for the past five years, supported by a modest payout ratio of 69% [2]. - Forecasts predict annual sales growth of over 26% in 2024 and 23.3% in 2025, driven primarily by its weight loss drug Zepbound [2]. - Zepbound's peak sales are estimated at around $50 billion, potentially making it the best-selling pharmaceutical product globally, although competition may impact these figures [3]. Vanguard Growth Index Fund ETF - The Vanguard Growth Index Fund ETF tracks the CRSP US Large Cap Growth Index and has an expense ratio of 0.04% with a 30-day SEC yield of 0.42% [4]. - It has a 10-year average annualized return of 15.3% and holds 199 stocks with a median market capitalization of $1.2 trillion, trading at approximately 37 times the average forward earnings of its holdings [4]. - The ETF is heavily concentrated in consumer discretionary and technology sectors, with 76.5% of its holdings in these areas, which may limit diversification [5]. Comparative Analysis - Eli Lilly is positioned to potentially join the trillion-dollar market-cap club, driven by its strong pipeline and the success of Zepbound, appealing to investors willing to take on single-stock risk [6]. - The Vanguard Growth Index Fund ETF offers diversified exposure to growth trends, including key players in artificial intelligence and obesity care, making it suitable for risk-averse investors [6]. - The choice between investing in Eli Lilly or the Vanguard ETF depends on individual risk tolerance and investment goals, with Lilly likely to experience more volatility compared to the ETF [7].