Why This Standout Vanguard Dividend ETF Is Better Poised for Growth Than You Think

2 hours ago 2

Dan Caplinger, The Motley Fool

Sun, March 22, 2026 astatine 11:28 AM CDT 4 min read

There's a cognition among investors successful exchange-traded funds that definite types of stocks are mutually exclusive. For example, immoderate ETFs transportation themselves arsenic perfect for investors looking for maximum growth, portion others constituent to the benefits of dividend stocks that regularly wage streams of income to their shareholders. The thought is that putting unneurotic an ETF portfolio that incorporates aggregate strategies volition automatically springiness you a diversified portfolio.

As it turns out, though, that's not ever the case. With the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG), for instance, investors get an income-oriented ETF that's not astir arsenic anti-growth arsenic immoderate of its peers. In this last nonfiction connected the Vanguard ETF for the Voyager Portfolio, you'll spot conscionable however important it is not to marque assumptions astir the investments you're making wrong the exchange-traded money world.

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Multiple bundles of currency adjacent to each other.

At archetypal glance, the Vanguard Dividend Appreciation ETF's assemblage vulnerability looks mostly accordant with what you spot successful a batch of funds. Defensive sectors similar user staples and healthcare person important overweight vulnerability than the S&P 500. Financial services stocks besides marque a beardown showing. By contrast, there's little vulnerability to higher-growth sectors specified arsenic exertion and connection services. This is emblematic among dividend ETFs due to the fact that tech stocks thin to reinvest much of their disposable superior backmost into increasing their businesses internally and are little apt to wage important dividends.

Yet erstwhile you look a small much closely, you'll spot immoderate cardinal differences betwixt Vanguard Dividend Appreciation and its peers. As it turns out, 3 of its apical 4 holdings are so tech stocks: Broadcom (NASDAQ: AVGO), Apple (NASDAQ: AAPL), and Microsoft (NASDAQ: MSFT). Those 3 holdings unsocial marque up astir 13% of the ETF's assets and relationship for astir fractional of the fund's tech exposure.

Most dividend investors aren't utilized to seeing tech stocks similar these among a dividend ETF's holdings. The crushed is simple: Broadcom presently has a dividend output of 0.8%, portion Apple's output is 0.4%, and Microsoft's is conscionable nether 1%. Those figures are each beneath what you'd get successful dividends simply from investing successful an S&P 500 ETF.

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