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Is the Vanguard Dividend Appreciation ETF the Smartest Investment You Can Make Today?
The Motley Foolยท2025-08-21 08:45

Core Viewpoint - The Vanguard Dividend Appreciation ETF is an attractive investment option for long-term growth-oriented investors, but it may not be suitable for those seeking immediate income [2][12]. Investment Strategy - The ETF tracks the S&P U.S. Dividend Growers Index, focusing on U.S. companies that have increased their dividends for at least 10 years [3][5]. - The ETF eliminates the highest-yielding 25% of stocks, which indicates it is not designed for income seekers [5][6]. Dividend Performance - The ETF currently has a dividend yield of 1.7%, which is lower than many income-focused ETFs [6]. - Since its inception in 2006, the ETF's dividend has increased by more than 750%, suggesting significant long-term income potential for investors who hold it [11]. Target Investors - The ETF is ideal for investors with a long time horizon until retirement, as it offers exposure to companies with a history of dividend growth [8][10]. - It is also suitable for growth-oriented investors who appreciate the compounding effect of reinvesting dividends over time [9][10]. Cost Efficiency - The ETF has a low expense ratio of 0.05%, making it a cost-effective way to gain diversified exposure to over 300 stocks [9].