VIG invests in firms that have had 10 consecutive years of dividend growth. But what happens when a business doesn't increase one year? They drop out of VIG. New ones join and old ones leave all the time. Last year the turnover was 13%. As a result of this turnover, the dividends from VIG don't just infinitely increase and there isn't "consistent income growth". The dividend can go down as well, especially depending on economic conditions. Check out the 5-year dividend yield chart.I'm struggling to see how a diversified, low cost ETF that has consistently had income growth is bad for income based investors.
That seems irrelevant given that both are bad funds for income investing. A bucket with one hole in the bottom carries water better than a bucket with 3 holes, but I don't want to really use either if given the choice.
Not much "consistent income growth" there to speak of.
Let's check out the chart for VOO (S&P 500)
Looks like a nearly identical curve with a slightly lower yield. So is VIG really selecting some magic potion or are the funds it selects subject to all the same market headwinds that everything else is?
Another question worth asking oneself, why would we want to avoid owning a great company simply because it has only increased its dividends for 8 years and not 10? What about a company that had increased its dividend for 50 years but then cut it one year? Out of VIG it goes. Not to mention the fact that of the top performing funds for the past 15 years, most have paid little to no dividend.
At any rate, it's silly to rely on something like dividends and doubly silly to rely on rules about picking companies that have paid dividends a certain way in the past, especially when it isn't reliable at all and could change in the future.
Statistics: Posted by rushrocker — Tue Oct 29, 2024 2:33 am — Replies 101 — Views 12136