By Adam Jusko, ProudMoney.com, adam@proudmoney.com
Earning dividends on their investments is a goal for many investors, especially those who are in or nearing retirement. Vanguard is a popular funds company, due in particular to the low expense ratios (i.e., fees) of most of its funds. Below we offer a list of Vanguard dividend mutual funds and exchange-traded funds (ETFs), with a short summary that will shed some light on how they differ. (If a mutual fund and ETF are essentially the same in terms of holdings and investing goals, they are listed together.)
- VDAIX (Vanguard Dividend Appreciation Index Fund) and VIG (Vanguard Dividend Appreciation ETF) – Index fund or ETF that tracks the performance of the Nasdaq US Dividend Achievers Select Index, consisting of companies that have a history of increasing dividends. Top holdings include Microsoft, Walmart, Johnson & Johnson, PepsiCo, and McDonald’s.
- VYM (Vanguard High Dividend Yield ETF) and VHYAX (Vanguard High Dividend Yield Index Fund) – These Vanguard funds have the same stocks in their baskets, but the ETF has lower costs. Both track the performance of the FTSE High Dividend Yield Index, which includes stocks of companies generally characterized by high dividend yields. These slower-growing companies generally offer high dividend yields but may not provide as high of a total return in a bull market. Income-focused fund is likely to be attractive to investors who have a long-term investment goal and a tolerance for stock market volatility. Top holdings include JPMorgan Chase, Exxon Mobil, Johnson & Johnson, Wells Fargo, and Chevron.
- VEIPX (Vanguard Equity Income Fund) – Mutual fund’s goal is to “provide investors with an above-average level of current income while offering exposure to the stock market,” and “typically invests in companies that are dedicated to consistently paying dividends.” Top holdings include JPMorgan Chase, Johnson & Johnson, Chevron, Verizon, and Intel.
- VQNPX (Vanguard Growth and Income Fund) – Calling this one a dividend mutual fund may be a bit of a stretch, as it “seeks both capital appreciation and dividend income” while seeking to “outperform the Standard & Poor’s 500 Index.” Top holdings include Apple, Alphabet (Google), Amazon, Microsoft, and Facebook.
- VGSLX (Vanguard Real Estate Index Fund) and VNQ (Vanguard Real Estate ETF) – Vanguard mutual fund or ETF that invests in real estate investment trusts (REITs), which are companies that purchase office buildings, hotels, and other real estate property for purposes of collecting rents as well as (hopefully) future increased value. May offer higher dividends than other funds, but being narrowly-focused on real estate, it also has the risk of a lack of diversification.
Author: Adam Jusko