Started a position in Vanguard Dividend Appreciation ( Admiral Shares (VDADX)) as a quick way to expand my exposure to dividend payers that are/have focus on div appreciation.
The fund tracks the NASDAQ US Dividend Achievers Select Index, which is a collection of roughly 180 dividend stocks that have improved their annual payments for at least 10 years.
Unsurprisingly, that portfolio is chock full of blue chips that have long held top positions in their respective industries, including the likes of Walmart (WMT), Johnson & Johnson (JNJ) and Microsoft (MSFT).
A bit more surprising to some investors, however, is the yield. Despite the “dividend” designation, VIG doles out a yield below 2% at the moment.
Many dividend growers do not, in fact, have high yields – and that’s OK. Investors should think about dividend growth almost like a screen for quality. The ability to raise dividends without interruption for at least a decade demonstrates financial stability and cash generation. Plus, dividend growth often is accompanied by rising share prices, which naturally results in a lower yield. Also remember that as the fund’s holdings expand their payouts over time, your yield on cost – the yield you receive based on the price you purchased the ETF at – will go up, too.
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I took 50% of what I had in the Vanguard GNMA fund and put into this fund. Expense ratio quite small too at 0.08%. Over the last 5 years I have replaced the income from the GNMA w/ both baby bonds, preferred shares and REITs.
This Vanguard taxable account also holds: VTSAX (Total Stock Market), VIPSX (Inflation Protected Securities), VFIJX (GNMA), VDAADX (Div Appreviation Fund,
Vanguard IRA; VFIAX (500 Index), VIPSX (Inflation Protected), VWIGX (International Growth)
By far the best performer over the last 5 years in the Vanguard Fund basket has been their 500 Index fund. 50% of the income was generated from the GNMA Fund. 10 year return on this basket was 8.8% and 10.2% for the 3 year return (this is when I moved 50% to the S&P 500 Index fund).
Good Investing
EKS |
