This Vanguard ETF Only Buys Companies That Have Raised Dividends 10 Years Straight
Not every dividend ETF is built the same way, and one strict entry rule separates the funds that keep paying through recessions from the ones that quietly slash their checks when the economy turns.
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If you are a decade or so away from needing your portfolio to pay the bills, you are in a sweet spot most retirees would envy. You want income that grows faster than inflation, from companies unlikely to slash their payouts the moment the economy wobbles.
That is exactly the pitch of the Vanguard Dividend Appreciation ETF (NYSEARCA:VIG), and it is why we are stacking it here against two popular higher-yielding rivals, the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) and the SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA:SPYD). VIG wins on one thing that matters more than a fat starting yield: dividend durability.
Index Rules Tell the Whole Story
VIG tracks the S&P U.S. Dividend Growers Index. That benchmark rewards consistency over the biggest yields on the screen. To make the cut, a U.S. company must have raised its dividend every single year for at least 10 consecutive years. Miss a raise once, and you are out. That single rule filters out most of the market and leaves behind companies that treat their dividend as a promise, not a preference.
The fund is cheap to own, too. Vanguard lists an expense ratio of 0.04%, which means you keep roughly $9,996 of every $10,000 working for you each year. That is about as low as fund fees get.
A Second Screen Most Investors Miss
Here is the piece that separates VIG from a generic dividend fund. After the 10-year raise test, the index excludes the highest-yielding slice of otherwise eligible companies. That sounds counterintuitive for a dividend fund, but there is a reason: a suspiciously high yield often means the share price has been falling because the market suspects the payout is about to be cut. Screening those names out is a deliberate quality filter. VIG is trying to own dividend growers.
Yield Today Versus Yield Tomorrow
This is where the trade-off gets real. VIG paid $3.5813 per share over the trailing twelve months and is running at an annualized forward rate of $3.9952, distributed quarterly. Against a current share price of $236.57, that is a modest yield by dividend-fund standards.
Compare it to the competition. SCHD leans into higher payers and concentrates its top weights in names like QUALCOMM at 6.74%, Texas Instruments at 5.9%, and UnitedHealth Group at 5.09% of net assets, with total net assets of roughly $94.9 billion. SPYD goes even further out on the yield curve, packed with REITs, utilities and telecom names such as Iron Mountain, CVS Health, Edison International, and AT&T. Those funds hand you more income up front. What they cannot promise is that every one of those payouts survives the next recession.
Why the Long Runway Changes the Math
If you are 10 years out, growth of income compounds in your favor. VIG’s own distribution history shows the pattern: quarterly payments have marched from roughly $0.225 in March 2010 to $0.9988 in June 2026. Price returns have followed. Shares are up 49.48% over the past five years and nearly 186% over the past 10 years — without dividends reinvested — with a nearly 10% gain over the past year and a 7.24% gain year to date. That is a total-return profile built on quality.
Weighing the Trade-Off
VIG is a poor fit if you need maximum income right now. The starting yield trails SCHD and SPYD by a meaningful margin, and the quality filter that excludes the highest yielders is the reason. You are deliberately accepting less cash today in exchange for faster dividend growth and lower cut risk tomorrow. It also skews toward large-cap defensives and consumer and industrial stalwarts, which can lag in a raging risk-on rally led by unprofitable tech.
For an investor with a decade of runway, that trade is the right one. You want the payout you receive in 2036 to be materially larger than the payout you would receive today, and you want the companies writing those checks to still be writing them. VIG’s index rules are engineered for exactly that outcome (we walked through how to build a dividend ladder that pays for life without ever touching the shares in a free report here). If your horizon looks like ours, this is the dividend ETF that belongs at the core.
Contact [email protected] for any questions or corrections.
Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.
He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.
