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Vanguard offers a variety of ETFs known for their low fees, and these two stand out in particular right now.
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The Vanguard Dividend Appreciation ETF contains more technology stocks than many traditional dividend ETFs.
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The Vanguard Total International Stock ETF offers exposure to both developed and emerging markets.
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10 stocks we like better than the Vanguard Dividend Appreciation ETF ›
Vanguard is one of the largest producers of exchange-traded funds (ETFs) in the world, with more than 80 available. Some of its ETFs, such as Vanguard S&P 500, Vanguard Growth ETFand Vanguard Total Stock Market ETF – are commonly invested in, but there are other under-the-radar Vanguard ETFs that can be great complementary pieces in a portfolio. Let’s cover two of these ETFs with unique approaches that could justify splitting $1,000 between them.
While some dividend ETFs prioritize companies with high dividend yields, Vanguard Dividend Appreciation ETF (NYSEMKT:VIG) It prioritizes companies that have consistently increased their annual dividend payments. To be included in VIG, a company must have increased its dividend for 10 consecutive years and not be among the top 25% of eligible companies. This last requirement helps you avoid performance traps.
VIG’s dividend yield is a modest 1.6%, lower than other popular dividend ETFs. However, investing in VIG is not about current performance; It’s about playing the long game. You invest hoping that your payout will be much higher in the coming years.
Many of VIG’s top holdings have below-average dividend yields, but have routinely increased their dividends and offer growth. and income opportunities. Here are five examples:
|
Company |
ETF Percentage |
Dividend yield |
Consecutive years of dividend increases |
|---|---|---|---|
|
Broadcom |
6.66% |
0.69% |
15 |
|
microsoft |
4.41% |
0.74% |
23 |
|
Apple |
4.15% |
0.40% |
14 |
|
Visa |
2.54% |
0.74% |
17 |
|
Walmart |
2.25% |
0.79% |
52 |
Table by author. Dividend yields at market opening on January 19. ETF percentages as of December 31.
With VIG, you get exposure to many more technology and growth stocks than other traditional dividend ETFs.
In general, it is advisable to include some international stocks in your portfolio to protect yourself against any difficult times in the US economy. That’s why I’m a fan of Vanguard Total International Stock ETF (NASDAQ: VXUS). It contains companies from developed and emerging markets, allowing you to take advantage of what both offer.
Developed markets generally have established industries, mature financial markets, and infrastructure that support reliable economic growth (think of the United States, Germany, Japan, the United Kingdom, and Australia). Emerging markets are growing and industrializing rapidly, but still lack some infrastructure and regulatory control (think China, Brazil, Mexico and India). Below is how a $500 investment would be divided between regions: