Mutual Fund #3: Vanguard Dividend Growth (VDIGX)
When it comes to a blend of value and growth investing, Vanguard Dividend Growth (VDIGX) remains a compelling option as a core position. Manager Don Kilbride mixed stocks with “growth” characteristics alongside “value” names in an effective way.
The goal is a mutual fund with an emphasis on companies poised to raise dividend payments over time. The end result is a concentrated large company fund with 52 holdings that represent fundamentally sound businesses that tend to hold up relatively well when the market faces challenges. In 2008, this mutual fund lost 26% compared to a 37% decline for the S&P 500. In 2013, VDIGX gained a solid 31.5% to show it can prosper in an up market as well.
Assets have grown to $19.1 billion as this fund has captured investors’ attention over time. Over the past decade the fund has gained an annualized 8.8%, placing it in the top 6% of its Morningstar peer group.
In terms of sector weighting, healthcare accounts for 19% of the fund, with 15% of the portfolio dedicated to industrials. Recent top holdings include UPS (UPS), Microsoft (MSFT), McDonald’s (MCD), Walmart (WMT) and Merck (MRK).
In typical Vanguard fashion, this fund sports a low 0.29% expense ratio.
Bill Wysor is the editor of The Relevant Investor. As of this writing, he was long VHCOX and VDIGX.