Some investors might want exposure to businesses that are increasing their dividends.
Despite short bursts of heightened volatility this year, the market is in record territory. It makes sense why that kind of performance will drive investors to take on more risk in their portfolios.
But there are certainly investors that favor dividend income. And the Vanguard Dividend Appreciation ETF (VIG 0.13%) can provide just what these market participants are looking for. If it’s $500 in yearly cash payouts that you want, here’s how many shares of this investment vehicle you’d need.
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Growing dividends and capital appreciation
In October, this ETF paid a dividend of $0.8647 per share. If you extrapolate that payout over an entire year, investors would need to own 155 shares of the Vanguard Dividend Appreciation ETF to generate $500 in annual income. This requires buying $32,000 worth of the stock based on Dec. 11’s price.
In the past decade, this ETF’s dividend has grown 82%, which means shareholders benefit from a higher income stream. There’s also capital appreciation that contributes to returns. The ETF’s price has climbed 188% over the trailing-10-year period.
Vanguard Dividend Appreciation ETF
Today’s Change
(-0.13%) $-0.29
Current Price
$221.79
Key Data Points
Day’s Range
$221.07 – $222.91
52wk Range
$169.32 – $224.59
Volume
1.7M
Understand the ETF’s composition
There are 338 total stocks in the Vanguard Dividend Appreciation ETF. Investors might think they benefit from broad diversification. However, the top 10 positions account for 34% of the entire portfolio’s assets, so there is a bit of concentration at the top.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Dividend Appreciation ETF. The Motley Fool has a disclosure policy.
