Want Nothing to Do With SpaceX? Buy This Ultra-Low-Cost Dividend Growth ETF in June.

SpaceX is expected to hit public markets on June 12, raising $75 billion at a $1.77 trillion valuation. With a smaller initial public offering (IPO), investors can simply ignore the news and not buy the stock. But SpaceX is so large that it is transforming the way indexes respond to megacap IPOs.

While the S&P 500 (SNPINDEX: ^GSPC) will not be adding SpaceX any time soon, the Nasdaq-100 -- the 100 largest non-financial stocks listed on the Nasdaq Composite -- is rewriting its index methodology to fast-track the inclusion of megacap companies like SpaceX, Anthropic, and OpenAI to give index fund investors quicker access to these companies.

While the fast-track rules are great news for investors who want a piece of these companies through their index fund holdings, it can be unsettling for folks who believe these companies are going public at sky-high valuations and could drag down the major indexes. What's more, many growth-focused exchange-traded funds (ETFs) will likely be buying SpaceX once it gets added to the indexes, which puts investors who want to buy growth stocks, just not SpaceX, in a difficult spot.

Fortunately, there's a low-cost ETF that balances growth, income, and value, which won't be buying SpaceX when it IPOs. Here's why the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) is a great buy now.

Image source: Getty Images.

Earnings-fueled dividend growth

The Vanguard Dividend Appreciation ETF is unique because it focuses on companies that consistently grow their earnings in lockstep with their dividends. Many income funds instead focus more on yield than on earnings growth quality. And some growth funds have very low yields because they hold few dividend-paying companies.

SpaceX, Anthropic, and OpenAI are unlikely to be in the Vanguard Dividend Appreciation ETF because they don't have a track record of consistently raising dividends. And there's no indication these companies will pay dividends at all.

The 10 largest holdings in the Vanguard Dividend Appreciation ETF provide a good sample of the fund's composition.

Data source: Vanguard, YCharts.

Broadcom, Apple, and Microsoft are tech giants with low yields because their stock prices have increased faster than their dividend growth rates. But all three companies have raised their dividends for over 15 consecutive years.

Similarly, JPMorgan Chase and Visa regularly repurchase stock and raise dividends.

Eli Lilly is by far the most valuable healthcare company in the world. And while it's normally seen as a growth stock, it also has an extensive track record of boosting its payout.

Walmart and Johnson & Johnson are Dividend Kings, companies that have paid and raised their dividends for at least 50 consecutive years.

Costco Wholesale has a track record of boosting its payout and paying special dividends every three to four years once its surplus cash gets high enough to return to shareholders.

Despite operating in the volatile oil and gas industry, ExxonMobil has paid and raised its dividend for an impressive 43 consecutive years -- a testament to its financial health and operational efficiency.

An ETF for investors looking for mature businesses

With a mere 0.04% expense ratio, the Vanguard Dividend Appreciation ETF has virtually the same fee structure as the Vanguard S&P 500 ETF (NYSEMKT: VOO), which has a 0.03% expense ratio, while providing a superior 1.5% dividend yield compared to 1% for the index.

The ETF is a great buy for investors who value a stock's total return (dividends plus capital gains) more than passive income alone. It's also a good fit for investors who like companies that balance their capital allocation by returning capital to shareholders through buybacks and dividends rather than pouring it all into long-term growth (like Amazon and Tesla).

SpaceX, Anthropic, and OpenAI are in the capital-raising stage of growth and will most likely dilute shareholders rather than reduce the share count through buybacks or return profits through dividends. This makes the Vanguard Dividend Appreciation ETF the perfect fit for investors who prefer seasoned, industry-leading companies and want to avoid exposure to high-profile IPOs.

JPMorgan Chase is an advertising partner of Motley Fool Money. Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Broadcom, Costco Wholesale, Eli Lilly, JPMorgan Chase, Microsoft, Tesla, Vanguard Dividend Appreciation ETF, Vanguard S&P 500 ETF, Visa, and Walmart. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.