Best Vanguard Dividend Funds for Long-Term Growth

If you're looking for long-term growth with a steady income stream, Vanguard dividend funds are a great place to start. Vanguard Dividend Appreciation Index Fund (VDAIX) has a 10-year annual return of 14.3% and an expense ratio of 0.06%.

This fund focuses on dividend-paying stocks with a track record of consistently increasing their payouts. With over $100 billion in assets, it's one of the largest and most popular dividend funds around.

VDAIX has a moderate-risk profile, making it suitable for investors with a medium-risk tolerance. Its diversified portfolio of over 250 stocks ensures that you'll have a broad exposure to the market.

For a more conservative approach, Vanguard Dividend Growth Fund (VDIGX) is a great option. With a 10-year annual return of 13.4% and an expense ratio of 0.3%, it's a solid choice for those who want to balance growth with lower risk.

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The Vanguard Dividend Funds are a great way to generate income through dividends. The Vanguard Dividend Appreciation Index Fund Admiral (VDADX) is a passive mutual fund that tracks an index of U.S. large-cap companies that have raised their dividends over time.

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Its portfolio consists of a blend of growth and value stocks of companies that demonstrate both the ability and the commitment to grow their dividends over time. As a result, VDADX shareholders get quality large caps including Microsoft (MSFT) and Walmart (WMT).

One of the standout features of VDADX is its low expense ratio of 0.08%, making it a cost-effective choice for investors. Its top sector holdings are consumer discretionary (23%), industrials (21%), and healthcare (15%).

If you're looking for a fund with a higher dividend yield, consider the Vanguard High Dividend Yield Index Fund ETF (VYM). It offers a yield of 2.82%, surpassing the average yield among large-cap stocks and the S&P 500 index.

The VYM has a low expense ratio of 0.06% and offers a diversified portfolio with holdings in 557 stocks across various economic sectors.

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The Vanguard Explorer Fund, VEXRX, is a great option for those looking to diversify their portfolio with smaller-cap stocks. It's a natural supplement to funds that focus on larger stocks.

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This fund has an impressive average annual return over the past decade, making it Vanguard's top-performing diversified U.S. small-cap portfolio. Its trailing dividend yield is a modest 0.59%, but it's a strong fund that can provide a good balance to your portfolio.

VEXRX focuses on smaller-cap stocks, which can be a good option for those who want to take on a bit more risk. However, it's worth noting that smaller companies typically have a tougher time surviving in hostile markets.

Here are some key facts about VEXRX:

Overall, VEXRX is a solid choice for those looking to add some smaller-cap stocks to their portfolio.

Dividend funds are a great option for investors looking for regular income. They focus on buying stocks with attractive dividend yields.

Vanguard Dividend Growth Fund Investor Shares and Vanguard Equity Income Fund Investor Shares are two popular options. These funds have similar objectives, but they differ in many respects.

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One key difference is the number of stocks held in each fund. Vanguard Dividend Growth Fund Investor Shares has a more concentrated portfolio, while Vanguard Equity Income Fund Investor Shares holds a larger number of stocks.

Both funds are reliable, low-cost vehicles for longer-term investors. This is in line with many Vanguard mutual funds, which have a reputation for being stable and affordable.

To find the best Vanguard dividend funds, consider the following key aspects. A conservative fund should have a stock allocation of 20% to 50% and a bond allocation of 50% to 80%.

Vanguard's low expenses are a major advantage, with costs lower than over 80% of other mutual funds. This means you can keep more of your money working for you rather than paying high fees.

For a core holding in your retirement portfolio, consider the Vanguard Growth & Income Fund (VGIAX). It offers excellent diversification, holding roughly 890 stocks and providing a one-two punch of dividend income and growth of principal.

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When choosing an investment, it's essential to understand the investment objectives of the fund.

Donald Kilbride, a seasoned investment manager, oversees Vanguard Dividend Growth Investor Shares, which focuses on a concentrated portfolio of around 50 stocks with strong competitive advantages.

The fund prioritizes consistent dividend growth over high yields, avoiding companies with recent dividend yield spikes that may signal upcoming dividend cuts.

Vanguard Dividend Growth Investor Shares has a 30-day SEC yield of 1.44% as of February 2022.

In contrast, Vanguard Equity Income Investor Shares tends to focus on high-yielding companies with low valuations and promising growth prospects.

This fund, advised by Michael Reckmeyer, Michael Hand, and Sharon Hill, holds a larger number of stocks with lower price-to-earnings (P/E) ratios, totaling 192 stocks.

Vanguard Equity Income Investor Shares has a 30-day SEC yield of 2.17% as of February 2022.

Here's a comparison of the two funds:

Ultimately, understanding the investment objectives of a fund is crucial in making informed decisions about your investments.

VYM, or the Vanguard FTSE Dividend Aristocrats ETF, is a popular investment option for those seeking consistent income and long-term growth. It tracks the performance of the FTSE US Dividend Aristocrats Index, which includes high-quality dividend-paying stocks.

The fund has a low expense ratio of 0.06%, making it an attractive choice for cost-conscious investors. This means that investors can keep more of their returns, rather than paying high fees.

VYM focuses on companies with a history of consistently increasing their dividend payouts, providing a relatively stable source of income. This can be particularly appealing in uncertain market conditions.

With a portfolio of over 140 stocks, VYM offers diversification and reduced risk. This can help investors sleep better at night, knowing their investments are spread across various sectors and industries.

The fund has consistently outperformed its benchmark over the long term, making it a solid choice for those seeking stable growth.

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To find the best Vanguard dividend funds, we started by ranking all of the company's U.S. funds by 10-year average annual returns, which shows the funds' stability through market ups and downs.

We then screened the top-performing Vanguard funds for those with the best trailing 12-month yields, as investors prize income and it's a sign of a company's financial strength.

Our methodology involved ranking the funds by 10-year average annual returns, which helps to identify the most stable funds.

We also looked at the minimum initial investment requirements for each fund, noting that defined contribution retirement plans like 401(k)s often have lower minimum investment thresholds.

Here are the key factors we considered when selecting the best Vanguard dividend funds:

We considered a range of Vanguard funds, each with its own investment objectives and strategies, such as Vanguard Dividend Growth Investor Shares, which prefers a concentrated portfolio of around 50 stocks with strong competitive advantages.

VDIGX has outperformed VEIPX over longer periods of time, with a 10-year average annual return of 13.94% compared to VEIPX's 12.87%.

Both funds have strong ratings from Morningstar, with VDIGX earning a three-star rating and VEIPX earning a four-star rating. For their five-year performance period, both funds are rated four stars.

Here's a comparison of their performance over different time periods:

VDIGX's expense ratio is 0.26%, while VEIPX's is 0.28%.

The VDIGX fund has consistently outperformed VEIPX over longer periods of time. It generated an average annual return of 13.94% for the 10 years ended Jan. 31, 2022.

The VDIGX fund's annualized returns for the last three- and five-year periods were 18.37% and 15.82%, respectively. This is a significant advantage over VEIPX's returns of 15.06% and 12.4% for the same periods.

Both VDIGX and VEIPX are highly rated by Morningstar, with VDIGX earning a three-star rating and VEIPX earning a four-star rating for the 10-year period. They are both four-star rated for their five-year performance period.

Here's a comparison of the two funds' expense ratios:

Keep in mind that a lower expense ratio can be beneficial for long-term investors, as it means more of your investment goes towards returns rather than administrative costs.

Sector Exposure is a key factor to consider when evaluating a fund's performance. The sector allocations of a fund can significantly impact its overall performance.

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Vanguard Dividend Growth Investor shares, for example, have a notable allocation to Industrials, making up 20.5% of their portfolio. Similarly, Health care is also a significant sector for this fund, accounting for 19.9% of its allocations.

Consumer staples are also a major sector for Vanguard Dividend Growth Investor shares, making up 17.2% of the fund's portfolio. This is in contrast to Vanguard Equity Income Investor Shares, which has a different sector allocation.

Vanguard Equity Income Investor Shares, on the other hand, favors Financials, allocating 21.6% of its portfolio to this sector. Health care is also a notable sector for this fund, with a 16.1% allocation. Consumer staples, however, make up a smaller portion of this fund's portfolio, accounting for 14.1%.

Here's a comparison of the sector allocations of Vanguard Dividend Growth Investor shares and Vanguard Equity Income Investor Shares: