Why the VIG ETF Is a Buy in 2026

5 hours ago 3

David Dierking, The Motley Fool

Thu, December 11, 2025 astatine 7:35 AM CST 5 min read

After years of lagging tech stocks, the Vanguard Dividend Appreciation ETF (VIG) present offers a much charismatic introduction point, tenable valuation, and resilient cash-flow growth.
VIG's absorption connected accordant dividend maturation positions it good for an situation wherever ostentation remains sticky.
Its prime tilt and blimpish screens tin assistance investors debar output traps and amended navigate volatility successful 2026.
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Dividend exchange-traded funds (ETFs) haven't precisely been successful favour for a while. With tech and artificial quality (AI) stocks producing market-leading returns implicit the past 3 years, investors haven't paid overmuch attraction to antiaircraft dividend stocks paying 2% to 3% yields.

2026 could supply a alteration of pace. Stocks person rallied astir without interruption for immoderate time, but determination are immoderate cracks processing nether the surface. The Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) could beryllium 1 of those investments that has the imaginable to execute good careless of which mode the system is headed.

VIG is simply a straightforward dividend maturation fund. It targets U.S. stocks that person accrued their dividend payments for the past 10 years, portion excluding the apical 25% highest-yielding companies. The last portfolio is market-cap weighted.

This strategy accomplishes a fewer things:

The 10-year request is simply a comparatively looser criterion than you'll find successful different dividend ETFs, which require, for example, a 25-year dividend maturation history. This allows for the inclusion of newer dividend growers, specified arsenic Apple, Microsoft, and Broadcom. This gives VIG much tech vulnerability than galore of its dividend ETF peers.
The elimination of the apical 25% yielding stocks helps debar imaginable output traps.
VIG's marketplace cap-weighting methodology means that the portfolio's mega-cap tech holdings get larger allocations. That could beryllium a bully happening if you're a tech bull.

While VIG's strategy astatine a precocious level is comparatively conservative, the information that it results successful 3 mega-cap tech names controlling 16% of the fund's assets really makes it much aggressive.

Let's instrumentality a look astatine immoderate of the main factors that volition impact the Vanguard Dividend Appreciation ETF successful 2026.

If you're a believer successful the "Magnificent Seven" stocks (or tech successful general) and deliberation that they person much upside ahead, VIG is astir apt a beauteous bully stake among dividend ETFs.