VIG Calls Itself a Dividend Appreciation Fund, But Its 1.5 Percent Yield Reveals What That Really Means Quick Read – Vanguard Dividend Appreciation ETF (VIG) holds Broadcom (AVGO) at 5%, Apple (AAPL) at 4%, and Microsoft (MSFT) at 4%, but with yields of 0.34-0.85% it functions…
a quality growth fund, not an income vehicle, while Schwab US Dividend Equity ETF (SCHD) yields 3.2% and Invesco S&P 500 High Dividend Low Volatility ETF (SPYD) yields 4.2% on the same positions. – VIG’s dividend-growth screen has trailed the S&P 500 by 43 percentage points over ten years, making it a quality tilt that underperforms broad-market exposure during tech-led rallies. – Imagine a retiree who reads that Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) is a top dividend fund, parks $300,000 in it, and waits for the checks to arrive. They get ~$4,500 a year
That is the VIG problem in one sentence. The fund’s 1.5% distribution yield sits right next to the S&P 500’s payout, which means VIG is not the income vehicle its name implies. It is a quality screen wearing a dividend costume, and the people most likely to misuse it are exactly the people the marketing seems to target.
What the fund actually buys VIG tracks the S&P U.S. Dividend Growers Index, which requires at least 10 consecutive years of annual dividend increases and then deliberately excludes the top 25% highest-yielding eligible names. So the methodology is engineered to filter out high yield.