Key Points
-
The Vanguard Dividend Appreciation ETF (VIG) is the ideal long-term wealth-building vehicle because it combines a high tech allocation with a high defensive equity allocation.
-
This “barbell” portfolio weighting helps balance the two segments out and delivers a smoother long-term ride for investors.
-
The 1.5% yield won’t really appeal to income seekers, but the long-term growth potential of the fund should.
- 10 stocks we like better than Vanguard Dividend Appreciation ETF ›
Investors are currently experiencing one of the longest and most successful stretches in market history.
Following three consecutive years of 16%+ gains in the S&P 500 (SNPINDEX: ^GSPC), the index is on pace to do it again in 2026. Those who have been overweight in tech, growth, and artificial intelligence (AI) stocks have probably done even better.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
While investors should certainly enjoy what’s happening right now, it’s important to maintain a long-term perspective. Recent gains shouldn’t make people overly optimistic about going all in on the tech and/or AI themes. These strategies will almost certainly have their ups and downs over the next several years. Long-term strategies should focus on steady and consistent long-term wealth creation.
Image source: Getty Images.
A winning strategy: Focusing on quality and growth
Investing solely in tech stocks may provide higher capital appreciation potential. But it’s also likely to produce higher highs and lower lows. And a high-growth strategy won’t perform well in every market environment.
That’s why I like the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) for long-term growth. Yes, it’s a dividend stock fund, and that isn’t always synonymous with growth. Its selection strategy, however, is built for both income and growth.
It selects from a universe of mostly large-cap dividend-paying companies with 10+ years of consecutive annual dividend growth. That strategy in isolation suggests a more conservative approach.
But its market-cap-weighting methodology actually tilts the portfolio back in the growth direction. It weights the portfolio not based on any dividend-related metric, but by company size. Any qualifying stock gets included, but the bigger ones get bigger weights.
That’s why Broadcom, Apple, and Microsoft are the top three holdings with a combined weight of 14%.
Why the Vanguard Dividend Appreciation ETF can make you rich
The Vanguard Dividend Appreciation ETF‘s approach, which combines riskier growth elements with a more defensive income component, actually gives it a great chance at success.
The more conservative side of the fund, healthcare and consumer staples, for example, accounts for a combined 25% weighting — helping to provide some downside protection and durability through rougher economic environments. But the 28% tech allocation provides the growth pop that’s appropriate for longer-term buy-and-hold strategies.
Since its inception 20 years ago, this fund has produced an average annual return of just over 10%. If you assume that rate of return in the future, a $500 monthly investment made and held for 20 years turns into just short of $400,000. Do it for 30 years, and the end balance turns into $1.1 million. The Vanguard Dividend Appreciation ETF can make you rich indeed!
But it requires discipline and a long-term focus. Manage that, and you’re well on your way to financial security.
Should you buy stock in Vanguard Dividend Appreciation ETF right now?
Before you buy stock in Vanguard Dividend Appreciation ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Dividend Appreciation ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $409,970!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,200,223!*
Now, it’s worth noting Stock Advisor’s total average return is 916% — a market-crushing outperformance compared to 210% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of July 7, 2026.
David Dierking has positions in Apple and Vanguard Dividend Appreciation ETF. The Motley Fool has positions in and recommends Apple, Broadcom, Microsoft, and Vanguard Dividend Appreciation ETF. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
