Vanguard Dividend Growth (VDIGX)
Vanguard Dividend Growth (VDIGX) is a fund that focuses squarely on solid firms that have the “ability and willingness” to grow dividends over time.
This $18.3 billion fund has been managed by Don Kilbride of Boston-based Wellington management since 2006. His style of investing is to focus on firms that are fundamentally solid businesses — not necessarily firms that simply pay outsized dividends. This leads him to companies that are growing at a moderate pace while throwing off some income for investors while they wait. These firms tend to hold up relatively well in a downturn — this fund lost 26.6% in 2008 compared to a 37% plunge for the S&P 500 that year.
Healthcare accounts for 20% of VDIGX’s 52 holdings, and consumer discretionary names take up another 17%. Mr. Kilbride prefers to own a focused group of large-cap stocks, leading to top holdings such as UPS (UPS), McDonald’s (MCD), Microsoft (MSFT), Walmart (WMT) and Cardinal Health.
VDIGX is up 29.2% YTD, and has returned an annualized 9.7% during the past decade. This performance places it in the top 4% of its Morningstar large blend category.
Expenses for this Vanguard fund are 0.29%.