Vanguard Dividend Appreciation ETF offers modest yield but strong dividend growth for long-term retirees.

Vanguard Dividend Appreciation ETF (VIG) is often overlooked due to its low current yield of about 1.6%, but it focuses on companies with a strong history of dividend growth rather than high initial payouts. The fund tracks the S&P U.S. Dividend Growers Index, which includes companies with at least 10 consecutive years of dividend increases and excludes high-yield but riskier stocks. With top holdings like Broadcom, Apple, and Microsoft, VIG has delivered competitive returns over the past decade and offers a growing income stream that can significantly increase yield on cost over a 20-year retirement horizon. This makes VIG suitable for pre-retirees or early retirees with a long investment horizon who prioritize inflation-beating income growth over immediate high dividends, while retirees needing current income might prefer higher-yield funds like SCHD.