What VIG actually is

VIG is Vanguard’s dividend growth ETF. It tracks an index of US companies that have a record of increasing their dividends over time. The fund attempts to hold all, or substantially all, of the stocks in the index, in about the same proportions.

It launched in 2006.

What is inside

The aim is companies that grow their payouts, not companies that pay the most today. These tend to be large, profitable businesses in technology, healthcare, financials and consumer sectors. Because many of these companies keep a lot of profit for growth, their current yields are modest.

That makes VIG different in character from funds such as VYM and SPYD, which look for the highest yields.

Distributions

VIG pays distributions from the dividends of its holdings. The starting yield is typically lower than a high-yield fund’s, but the income can grow over time as its companies raise their payouts. Check the fund’s current yield, fees and distribution schedule on the issuer’s website, because they change.

What to keep in mind

  • Lower starting income. It suits long-term growth in income, not maximum income today.
  • Technology weight. Many dividend growers are large technology and healthcare firms.
  • Changes to the index. The index rules can change over time.
  • Market risk. It falls with the market.

Quick take

VIG fits investors who care about dividend growth and long-term results more than yield today. Compare it with its sister funds on our comparison page.