Dividend ETFs For Retirement Investors #3: Vanguard Dividend Appreciation Index ETF
While an initial high yield can be great for retirement investors, a rising payout is even better. That’s because these rising dividend payouts can help keep the cold hand of inflation at bay. Over the longer term, inflation is one of the main deterrents to retirement.
Enter the Vanguard Dividend Appreciation Index ETF (VIG).
VIG tracks the NASDAQ US Dividend Achievers Select Index. That underlying index represents a portfolio of firms that have consistently raised their payouts over time. In fact, VIG’s 163 holdings have a juicy history of increasing dividends for at least ten consecutive years. The fund’s portfolio reads like a who’s who of American stalwarts — like Johnson & Johnson (JNJ) and PepsiCo. (PEP).
While VIG’s yield is only 1.91%, the name of the game here isn’t high income, but income that grows over time. That makes the fund an important tool for retirement investors looking to fight inflation. Pairing it with another ETF on this list for a bigger current yield could be the best strategy.
And since it’s a Vanguard fund, you know that costs of ownership are next to nothing. Expenses for VIG run a dirt-cheap 0.1%.