VIG: How This $66B Dividend Growth ETF Lost Its Appeal

Summary

  • In the past, VIG's trade-off was clear to me: a bit more in dividends and a bit less volatility, but a bit less in total returns.
  • But now, I see VIG performing similar to the S&P 500 in flat and declining markets and being a persistent laggard in a bull market that doesn't want to end.
  • Based on sales, earnings, and even dividend growth rates, the S&P 500 is the superior Index, and I can't find many good reasons to recommend VIG anymore.
  • It's not a time to panic as VIG will still deliver market-like returns, but I do think investors should take some time to consider what they're gaining from this ETF, and if their cash could be better deployed elsewhere.
  • Looking for a helping hand in the market? Members of Hoya Capital Income Builder get exclusive ideas and guidance to navigate any climate. Learn More »
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Investment Thesis

The Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) appears designed with the dividend growth investor in mind - that is, one who wants to own a collection of dividend growth stocks rather than high-dividend-yielding stocks that may not be the safest. While this

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This article was written by

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I'm a data-driven ETF analyst who likes to do deep dives into how funds are constructed and what factors are likely to make them winners or losers. I have a database of over 700 ETFs that I follow, so I'm able to show readers the best- and worst-performing funds in each category with each one I review. My preference is for stocks to have strong cash-generating and debt management qualities. I welcome all questions, comments, and suggestions for improvement, and I enjoy my time engaging with the Seeking Alpha community.

I hold a Bachelors degree in Commerce with a major in Accounting and hold a Certificate in Advanced Investment Advice from the Canadian Securities Institute. I have also completed the Portfolio Management Techniques course, fulfilling the educational requirements for a Chartered Investment Manager (CIM) designation. I have passed CFA Level 1, and I am currently studying to become licensed to advise on options and derivatives in Canada. This past November, I became a contributor for the new Hoya Capital Income Builder Marketplace Service, and enjoy working with and sharing ideas with some of the best researchers on Seeking Alpha. Sign up for a free trial today! Hoya Capital Income Builder.

Disclosure: I/we have a beneficial long position in the shares of SPY, SCHD, VIG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I plan on re-evaluating my long position in VIG in Q1 2022.

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