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2 Excellent Vanguard Dividend-Oriented ETFs

Vanguard Dividend Appreciation and Vanguard High Dividend Yield are both low cost, but they balance the trade-off between dividend yield and risk differently.

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Adam McCullough: Vanguard Dividend Appreciation ETF (VIG) and Vanguard High Dividend Yield ETF (VYM) are among the cheapest dividend-oriented funds available. VIG earns a Morningstar Analyst Rating of Gold while VYM earns a Morningstar Analyst Rating of Silver. The primary difference between the funds is that VIG targets dividend growth while VYM targets high-dividend yield.

VIG targets stocks that have raised dividend payments for at least 10 consecutive years and applies a profitability screen to avoid stocks that may be at risk of cutting their dividend payment. To further mitigate risk, VIG weights its holdings by their market capitalization and caps single stock weightings to 4% of the portfolio.

Adam McCullough does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.