Vanguard Dividend Appreciation ETF (VIG) intentionally excludes the top 25% highest-yielding stocks from its index, reducing the income investors receive. This methodology aims to avoid potentially risky high yields but also screens out some strong dividend payers like AT&T, Verizon, Altria, and Realty Income. While VIG charges a very low expense ratio of 0.04%, the real cost is the missed dividend income, which can compound significantly over time. Alternatives like Schwab US Dividend Equity ETF (SCHD) and iShares Core Dividend Growth (DGRO) include higher-yield stocks and may offer better income without sacrificing much total return. Investors should consider their goals—whether steady dividend growth or higher income—when choosing between these funds.
