VIG's Strange Rule: The Highest-Yielding Dividend Growers Aren't Allowed In
That rule makes a lot of sense for this exchange-traded fund once you understand why it's in place.
The Vanguard Dividend Appreciation ETF (VIG), the world's largest dividend ETF, follows a unique rule that excludes the highest-yielding 25% of its dividend growers. This strategy is designed to focus on companies that have consistently raised their annual payouts for at least 10 consecutive years, providing a simple yet effective approach for dividend growth investors. Since its inception in 2006, VIG has returned an average of 10.2% annually, demonstrating its efficacy in generating steady income.
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