Could Buying the Vanguard Dividend Appreciation ETF Today Set You Up for Life?
The Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) has a name that might confuse some investors. It includes the word "dividend," which makes it seem like it could be an income-focused exchange traded fund (ETF). But it also includes the word "appreciation," which suggests something entirely different. In the end, something entirely different is what you get -- but that's not necessarily bad if you have a lifetime of investing ahead of you. Here's what you need to know.
As far as exchange-traded funds go, the Vanguard Dividend Appreciation ETF is fairly simple to understand. It tracks the S U.S. Dividend Growers Index. That index starts by only looking at the companies that have increased their dividends for at least 10 years. It then eliminates the highest-yielding 25% of the stocks and buys the rest using a market cap weighting methodology.
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Source Fool.com
