With the market in a 3rd consecutive day of decline, investors are putting money into the Vanguard Dividend Appreciation ETF (VIG) according to the WSJ’s “buying on weakness” list which tracks stocks that fell in price but had the largest inflow of money.
VIG’s top holdings include Wells Fargo & Co, IBM and Coca-Cola. The $1.9 billion fund carries an expense ratio of 0.24% and pays a dividend yield of 2.14%.
In the column ETF Portfolios for Every Purpose, Kiplinger’s Jeffrey Kosnett recently outlined a series of all ETF portfolios with the idea that you can pursue any goal with nothing more than exchange-traded funds.
Kosnett’s all ETF Growth and Income portfolio includes these funds:
Conventional investing wisdom these days is to go with dividend paying stocks. The logic is that even if the market moves sideways, you’ll get paid to wait.
However, SmartMoney’s Roya Wolverson cautions that investors should tread carefully among the three dozen dividend ETFs due to their heavy concentration in the troubled financial sector.
In the article Beware the Dividend ETF, Wolverson notes that, although banks and insurance companies have historically paid some of the highest dividends, they have recently been cutting back.
Wolverson recommends looking for ETFs that re-evaluate the portfolio often and for funds that are not overly exposed to financials.
The First Trust Value Line Dividend Index Fund (FVD) re-evaluates monthly and has a 17% exposure to financials. The Vanguard Dividend Appreciation Fund (VIG) has only 8% of portfolio holdings in financials.
