The Vanguard Dividend Appreciation ETF (VIG) and the iShares Core High Dividend ETF (HDV) offer distinct approaches to dividend investing, catering to different investor priorities. VIG, with a lower expense ratio of 0.04%, focuses on companies with a history of increasing dividends, such as Microsoft, Apple, and Broadcom. It leans heavily toward technology, financial services, and healthcare, offering a trailing dividend yield of 1.5%. In contrast, HDV, with an expense ratio of 0.08%, targets high-yielding stocks like ExxonMobil, Chevron, and AbbVie, concentrating on consumer staples and energy. Its trailing dividend yield stands at 3.1%, more than double that of VIG.
Performance-wise, HDV has delivered stronger returns, with a 1-year return of 34.6% compared to VIG's 16.2%. Over five years, HDV's maximum drawdown was 15.4%, while VIG's was 16.4%. HDV's growth of $1,000 over five years amounted to $1,869, surpassing VIG's $1,641. These differences highlight HDV's appeal for income-oriented investors seeking higher current yields and lower volatility.
VIG's broader portfolio of 333 stocks emphasizes growth-oriented sectors, while HDV's tighter portfolio of 74 holdings focuses on stability and current income. Investors must weigh these factors when choosing between maximizing current income with HDV or betting on long-term capital growth through dividend appreciation with VIG.