From 24/7 Wall St. · Ryne Mauck · · 1m 50s
Dividend Growth ETFs Show Different Returns
Three dividend growth ETFs returned vastly different amounts over the past year: 12.53%, 11%, and 5%.
In brief
Three dividend growth ETFs returned vastly different amounts over the past year: 12.53%, 11%, and 5%. Vanguard Dividend Appreciation ETF (VIG) returned 11% over one year, WisdomTree U.S. Quality Dividend Growth Fund (DGRW) returned 13%, and Vanguard International Dividend Appreciation ETF (VIGI) returned 5%…
Dividend Growth ETFs Show Different Returns
Three ETFs built around rising payouts instead of big yields have taken very different paths over the past year.
One-Year Returns Vary Widely
Vanguard Dividend Appreciation ETF (VIG) returned 11%, WisdomTree U.S. Quality Dividend Growth Fund (DGRW) returned 13%, and Vanguard International Dividend Appreciation ETF (VIGI) returned 5%.
Why Dividend Growers Pay Less Today
A company with plenty of room to raise its dividend is usually paying out a fairly small share of its earnings right now.
VIG Sets the Benchmark for U.S. Dividend Growth
VIG tracks the S&P U.S. Dividend Growers Index with 10 straight years of dividend increases and no high-yield stocks.
DGRW Adds a Quality Filter and Took the Lead
DGRW ranks companies by expected long-term earnings growth plus return on equity and assets, producing 13% one-year returns.
VIGI Brings the Same Discipline Abroad
VIGI applies a similar screen outside the U.S. with seven or more years of dividend growth and excludes high-yield stocks.
What Really Explains the International Gap
The gap is real and large: no U.S. mega-caps, a different mix of companies, and currency translation.
The Fair Conclusion
VIGI’s results mostly reflect a period when the largest U.S. companies dominated global returns.
Which Dividend Growth Fund Fits Your Plan
VIG is the widest and largest fund; DGRW suits investors who want a forward-looking quality screen; VIGI belongs with investors who want international exposure.
The short version
Vanguard Dividend Appreciation ETF (VIG) returned 11% over one year, WisdomTree U.S. Quality Dividend Growth Fund (DGRW) returned 13%, and Vanguard International Dividend Appreciation ETF (VIGI) returned 5%.
