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Appreciation For Dividend ETFs Is Not Dead

Published Mon, 19 Dec 2016 11:41:45 -0500 on Seeking Alpha

One of the major difficulties of investing is being able to pick a winner and stick with it. While picking winners in the stock market can be very difficult, picking winners in the ETF market is easier for investors. There are a few major differences in determining the right investment and the right price to buy in. Positive or negative returns for any domestic equity ETF are overwhelmingly influenced by the market moving higher or lower. However, the relative returns between different ETFs are a different factor. Further, there is the question of how the ETF influences the investor's strategy. The Vanguard Dividend Appreciation ETF (NYSEARCA: VIG) performs well on several of these metrics.
What does VIG do?
VIG attempts to track the investment results of the Nasdaq US Dividend Achievers Select Index. The general methodology is to focus on stocks that have a history of increasing dividends over time. The ETF falls under the category of "Large Blend" and has a very high correlation with the S&P 500 (NYSEARCA: SPY).
Holdings and Expense Ratio
To find ETFs that will perform better comes down to looking at their holdings, the strategy they use to pick their holdings, and the macroeconomic situation. Of course, it also includes looking at factors like the expense ratio. All else equal, a lower expense ratio can significantly influence returns over year. Investors don't know whether the market will go up or down, but they do know they will be stuck... Read more