Want Passive Dividend Income? VIG and HDV Deliver High Yields But Differ on Growth and Sector Allocation
Key Points
The Vanguard Dividend Appreciation ETF charges lower fees and has delivered stronger recent returns, but it pays a much lower dividend yield than the iShares Core High Dividend ETF.
VIG holds far more stocks and tilts toward technology and financials, while HDV concentrates on energy, healthcare, and consumer staples sectors.
Both ETFs offer deep liquidity and broad diversification, but their different sector exposures and yield profiles may appeal to different income or growth priorities.
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The Vanguard Dividend Appreciation ETF (NYSEMKT:VIG) and the iShares Core High Dividend ETF (NYSEMKT:HDV) both aim to provide access to dividend-focused U.S. stocks, yet their approaches and portfolios differ significantly. VIG is more growth-oriented with a tech tilt, while HDV favors higher yields and defensive sectors.
This comparison breaks down cost, performance, risk, and portfolio makeup to help clarify which fund may better suit a particular income or growth preference.
Snapshot (cost & size)
| Metric | HDV | VIG |
|---|---|---|
| Issuer | iShares | Vanguard |
| Expense ratio | 0.08% | 0.05% |
| 1-yr return (as of Nov. 30, 2025) | 2.26% | 8.79% |
| Dividend yield | 3.09% | 1.64% |
| Beta (5Y monthly) | 0.62 | 0.86 |
| AUM | $11.7 billion | $115.1 billion |
Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.
VIG comes with a slightly lower expense ratio, making it a bit more affordable for long-term holders. However, HDV delivers a notably higher dividend yield, which could appeal more to income-focused investors.
Performance & risk comparison
| Metric | HDV | VIG |
|---|---|---|
| Max drawdown (5 y) | -16.52% | -20.40% |
| Growth of $1,000 over 5 years | $1,411 | $1,605 |
What's inside
VIG spreads its assets across 338 holdings and has been around for nearly 20 years. The fund leans toward technology (29%), financial services (22%), and healthcare (16%), with top positions in Broadcom, Microsoft, and Apple.
Its approach focuses on companies with a consistent record of dividend growth, and its large assets under management (AUM) and sector allocation offer broad exposure across the U.S. equity market.
HDV, by contrast, holds 75 stocks and is more concentrated in consumer staples (25%), healthcare (22%), and energy (21%). Its largest positions are Exxon Mobil, Johnson & Johnson, and Chevron.
The fund’s focus on higher-yielding, established companies creates a different risk and income profile compared to VIG’s growth-oriented strategy.
For more guidance on ETF investing, check out the full guide at this link.
Foolish take
Both VIG and HDV focus on companies with higher dividend payouts, making them smart options for income-focused investors looking to build a steady stream of passive dividend income.
HDV has the edge in terms of dividend payout, with a much higher yield of 3.09% compared to VIG's 1.64%. It's also the more stable of the two funds, with a lower beta and less severe max drawdown over the last five years -- indicating smaller price fluctuations.
Because HDV's top holdings and sectors are in defensive sectors -- which are more resilient to economic downturns and generally experience consistent demand -- this ETF is likely to see less volatility going forward as well.
VIG, however, shines with its growth potential. Compared to HDV, it's more focused on stocks with the potential to grow their dividend over time. Additionally, because it's much more technology-oriented than HDV, it also has the potential for higher total returns.
VIG has outperformed HDV fairly significantly with its one- and five-year total returns, which may be a perk for those seeking investment income in addition to dividend income. With its lower expense ratio, investors can save some money on fees, too.
Glossary
ETF: Exchange-traded fund; a basket of securities traded on an exchange like a stock.
Dividend yield: Annual dividends paid by a fund or stock expressed as a percentage of its current price.
Expense ratio: Annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Beta: A measure of an investment's volatility compared to the overall market, typically the S&P 500.
AUM: Assets under management; the total market value of assets a fund manages on behalf of investors.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Defensive sectors: Industries like consumer staples or healthcare that tend to be less sensitive to economic cycles.
Concentration: The degree to which a fund invests in a small number of holdings or sectors, increasing exposure to specific risks.
Holdings: The individual securities or assets owned within a fund or portfolio.
Dividend growth: An investment strategy focusing on companies that regularly increase their dividend payments over time.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Sector allocation: The distribution of a fund's investments across different industry sectors.
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Katie Brockman 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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