We've made several changes in our model portfolio to increase our margin of safety amid the market v...
A Vanguard in Dividend Growth
11/10/2016 10:00 am EST
We have focused a lot lately on the importance of strong and rising dividends, especially in a lackluster economy like this one, notes Genia Turanova, dividend expert and editor of Leeb Income Performance.
In keeping with that theme, this issue, we review once again Vanguard Dividend Growth Fund (VDIGX), which is rated 5-stars by Morningstar, as well as Gold.
The fund had returned 17.4 percent in the latest 12 months as of this writing, and 7.2 percent, year-to-date. Its 3- and 5-year returns came in at 11.6 percent and 14.2 percent, respectively.
The fund gets assistance, as it were, from its extremely low 0.33 percent expense ratio, down 5 basis points from last year.
But a fund can hardly win 5 stars due to its expenses alone. And indeed, VDIGX also has the benefit of long experience from manager Donald Kilbride.
He invests the fund’s stock portfolio (roughly 45 to 55) in firms flush with cash that, in keeping with our own philosophy, seem likely to continue to raise their dividends, based on the companies’ past growth and records.
The fund is currently invested 87.5 percent of its portfolio in U.S. stocks, 9.3 percent in non-U.S. stocks, 0.3 percent in cash, and 2.9 percent in other securities.
The fund holds nearly 21 percent of its equities in industrial stocks, 20.5 percent in healthcare, 17.2 percent in consumer defensive, 13.1 percent in financial services and 12 percent in consumer cyclicals.
That’s nice diversification across sectors, and varies enough from the averages in the category to explain some of the past performance.
By Genia Turanova, Editor of Leeb Income Performance
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