The Vanguard Dividend Appreciation Index Fund ETF (VIG) Delivers Stronger Growth Than the iShares Core High Dividend ETF (HDV)
Key Points
The Vanguard Dividend Appreciation ETF charges a lower expense ratio but delivers a much lower yield than iShares Core High Dividend ETF
VIG has outperformed HDV over the past year and five years, though with a steeper recent drawdown
The two funds differ sharply in sector exposures, with VIG overweight technology and HDV tilted toward defensive and energy stocks
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The Vanguard Dividend Appreciation ETF (NYSEMKT:VIG) and the iShares Core High Dividend ETF (NYSEMKT:HDV) differ most in dividend yield, sector mix, and risk profile, with VIG offering lower costs but HDV providing notably higher income.
Both funds target U.S. dividend-focused strategies, but Vanguard Dividend Appreciation ETF screens for companies with a record of raising dividends, while iShares Core High Dividend ETF emphasizes stocks with the highest current yields. This matchup explores which approach may appeal more, factoring in cost, performance, and portfolio construction.
Snapshot (cost & size)
| Metric | HDV | VIG |
|---|---|---|
| Issuer | IShares | Vanguard |
| Expense ratio | 0.08% | 0.05% |
| 1-yr return (as of 2025-11-14) | 3.6% | 8.4% |
| Dividend yield | 3.1% | 1.6% |
| AUM | $11.6 billion | $115.1 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
VIG is slightly more affordable on fees, but HDV’s annual expenses are already quite low. Investors prioritizing income may notice HDV pays nearly double the dividend yield of VIG, which could matter for those seeking current cash flow.
Performance & risk comparison
| Metric | HDV | VIG |
|---|---|---|
| Max drawdown (5 y) | -15.42% | -20.39% |
| Growth of $1,000 over 5 years | $1,400 | $1,556 |
What's inside
The Vanguard Dividend Appreciation ETF focuses on large-cap stocks with a track record of annual dividend growth, holding 338 companies as of its nearly 20-year history. Its sector allocation leans heavily into technology (28%), financial services (22%), and healthcare (15%). Top positions include Broadcom (NASDAQ:AVGO), Microsoft (NASDAQ:MSFT), and Apple (NASDAQ:AAPL), reflecting a growth-oriented tilt compared to many income funds.
By contrast, the iShares Core High Dividend ETF concentrates on higher-yielding companies, with a portfolio dominated by consumer defensive (25%), energy (22%), and healthcare (20%) stocks. Its top holdings are Exxon Mobil (NYSE:XOM), Johnson & Johnson (NYSE:JNJ), and Chevron (NYSE:CVX), giving it a more defensive and income-focused flavor.
For more guidance on ETF investing, check out the full guide at this link.
Foolish take
The Vanguard Dividend Appreciation ETF offers a much lower yield than the iShares Core High Dividend ETF right now, but it's also likely to deliver much more passive income over time. Over the past five years, the Vanguard Dividend Appreciation ETF has raised its quarterly payout by 30.15%. The iShares Core High Dividend ETF raised its payout by just 2.85% over the same time frame.
The iShares Core High Dividend ETF is limited to 75 relatively high dividend-paying U.S. stocks in the Morningstar Dividend Yield Focus Index. The Vanguard Dividend Appreciation ETF tracks the S&P U.S. Dividend Growers Index. The dividend payers in this index rarely offer high yields, but they're growing earnings rapidly enough to produce a high yield on cost for investors who hold them over the long run.
While their strategies differ, the end result for investors has been nearly indentical. Over the past five years, the Vanguard Dividend Appreciation ETF delivered a 72.8% total return. The iShares Core High Dividend ETF produced a slightly lower 70.6% total return during the same period.
Glossary
ETF: Exchange-traded fund; a basket of securities traded on an exchange like a stock.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges its investors.
Dividend yield: Annual dividends paid by a fund or stock divided by its current price, shown as a percentage.
Beta: A measure of an investment’s volatility compared to the overall market, usually the S&P 500.
Drawdown: The largest decline from a peak to a trough in an investment’s value over a specific period.
AUM: Assets under management; the total market value of assets a fund manages for investors.
Sector allocation: The percentage of a fund’s assets invested in different segments of the economy, like technology or healthcare.
Defensive stocks: Shares of companies that tend to remain stable during economic downturns, such as utilities or consumer staples.
Growth-oriented: An investment approach focused on companies expected to grow earnings faster than the market average.
Large-cap: Companies with a large market capitalization, typically over $10 billion.
Total return: The investment’s price change plus all dividends and distributions, assuming those payouts are reinvested.
Portfolio construction: The process of selecting and weighting assets within a fund to achieve specific investment goals.
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Chevron, Microsoft, and Vanguard Dividend Appreciation ETF. The Motley Fool recommends Broadcom and Johnson & Johnson and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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