This High-Quality Dividend-Growth Fund Can Serve as a Core Portfolio Holding
It forgoes high yield to pursue stocks that can sustain the growth of their dividend payments.
It forgoes high yield to pursue stocks that can sustain the growth of their dividend payments.
Dividend-growth funds focus on companies that have the ability and willingness to increase their dividend payments. Companies that regularly boost their dividends often have sustainable competitive advantages. Such high-quality companies can make excellent core holdings. Morningstar's manager research team recently highlighted three great dividend-growth funds. For this article, I'll take a deeper dive into Vanguard Dividend Appreciation ETF (VIG).
VIG is an excellent fund that offers a diversified portfolio of highly profitable U.S. dividend-paying stocks. Focusing on dividend growth reduces the fund's exposure to firms that have weak fundamentals and may not be able to sustain their dividend payments, which is a risk that often accompanies a narrow focus on yield. The fund's low fee contributes to its edge over the long run and supports its Morningstar Analyst Rating of Gold.
Adam McCullough has a position in the following securities mentioned above: AAPL. Find out about Morningstar’s editorial policies.