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Participant ○

VDIGX for income...

I began looking at VDIGX (Vanguard Dividend Growth) after it reopened.  Although I had owned it for years, I had been mainly looking at its TR, which has been quite good, and I remember it did relatively better in 2008 when most equity funds tanked.  I started looking closer because I saw some saying this fund was misnamed, because it had a less 2% SEC yield.  The actual yield has been around 2% since 2002 when it changed from the utility fund.  However, the closer I looked, the more I realized that this was a pretty darn good income fund as well.

For example, even though the yield hovers around 2%, the actual $ thrown off on a 10K investment in 2003 has gone from $219 to $3771 according to PV with all distributions reinvested.  If you take all the distributions, then it has gone from $219 to $2462 or up over 10 times in 15 years.

So what about lately?  In the last 5 years it has a CAGR of 11.42%, still throwing of 2% yield on price, but what surprised me was that is also has thrown off an average of 3%/year in CG distributions.  That is an average of 5% income/ year on a growing NAV (23.37 end of 2014, to 29.13 today).

I do recognize that CG are not as reliable as dividends, and they tend to disappear after a recession as the funds work off losses, but they are still a source of average income, and are equal to dividends in every respect when distributed in an oef equity fund.

Is it the best income fund out there?  Not by a long shot I'm sure.  But the combination of good TR and good income growth is attractive to me.

Moz

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Frequent Contributor

Re: VDIGX for income...

VEIPX provides higher current income with some dividend growth.

VDIGX has lower income with more potential dividend growth.

Both are active. Respective passive ETFs are VIG, VYM.

"Best" depends upon your criterion.

Note that,

%TR = %Dividend_yield + %Dividend_growth + %Change_in_P/D,

or,

%TR = %Dividend_yield + %Earnings_growth + %Change_in_P/E.

YBB
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Participant ○○

Re: VDIGX for income...

I moved some of my bond allocation into VDIGX during the taper tantrum in 2013. 11.01% annual return for the last 5 years, actually higher than VEIPX at 9.36%.

Not to quibble  I would have been happy with either fund, given that I sold my original stake in corporate bond fund  PBDAX, which has returned 4.97% over the same period.

It's mostly the year end CG distributions though that I would notice. The quartely payment are like .5%. However, it all can be spent.

 

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Re: VDIGX for income...


@DocWu wrote:

I moved some of my bond allocation into VDIGX during the taper tantrum in 2013. 11.01% annual return for the last 5 years, actually higher than VEIPX at 9.36%.

Not to quibble  I would have been happy with either fund, given that I sold my original stake in corporate bond fund  PBDAX, which has returned 4.97% over the same period.

It's mostly the year end CG distributions though that I would notice. The quartely payment are like .5%. However, it all can be spent.

 


Agree.  .5% per quarter doesn't sound like much, but as pointed out above, the actual $ income in 2018, even if one took all the distros since 2003, would have been $1200 for each 10K invested according to PV.

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Re: VDIGX for income...

Just to add a choice, there is also now a passive fund, High Dividend Yield Index Admiral (VHYAX).  I believe this fund opened around March of 2019.  Dividends are comparable with Equity Admiral and the ER is index level .08. 

I just started looking at this fund yesterday, so don't have much more info, but on the other hand, it hasn't got much history just yet.

 

Mark

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Re: VDIGX for income...


@Markyarts wrote:

Just to add a choice, there is also now a passive fund, High Dividend Yield Index Admiral (VHYAX).  I believe this fund opened around March of 2019.  Dividends are comparable with Equity Admiral and the ER is index level .08. 

I just started looking at this fund yesterday, so don't have much more info, but on the other hand, it hasn't got much history just yet.

 

Mark


This isn't really a new fund.

It used to exist as VHDYX/VYM since 2006- and since 2019- as VHYAX/VYM. Holders of Investor VHDYX got transferred into Admiral VHYAX.

YBB
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Frequent Contributor

Re: VDIGX for income...

No doubt the managers did a five job as one can see with their YTD returns of the individual stocks. It may asking too much to expect returns like those in the near future.

https://www.marketwatch.com/investing/fund/vdigx/holdings

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Participant ○

Re: VDIGX for income...


@Markyarts wrote:

Just to add a choice, there is also now a passive fund, High Dividend Yield Index Admiral (VHYAX).  I believe this fund opened around March of 2019.  Dividends are comparable with Equity Admiral and the ER is index level .08. 

I just started looking at this fund yesterday, so don't have much more info, but on the other hand, it hasn't got much history just yet.

 

Mark


VDIGX is a blend fund, while VYM and its OEF counterparts are value funds.  since I have a large chunk of Wellesley, I prefer VDIGX as there is very little overlap compared to VYM and Wellesley.

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Contributor ○○○

Re: VDIGX for income...

As Yogi has mentioned, I have owned VIG for a long time and the dividend growth is very similar to what you are saying about VDIGX. I have also owned VYM sometimes, but not now. The dividend growth rate of even VTI will be close to that of VIG. However, I have a large undistributed CG because it is an ETF not a mutual fund. So, the unit value will increase faster than the mutual fund because, by law, mutual funds must distribute their CG.

It is not just dividend but also dividend growth rate is also important. The dividend growth rate of VDIGX is four times that of VIG. Over a period of time, your initial investment will start paying of big over the years.

Vanguard Dividend Growth Fund Inv (VDIGX).png

Vanguard Dividend Appreciation ETF (VIG) Stock Analysis News.png

Here are the screen shorts of both.

Here is the 10-year dividend distribution in the form of a chart.

 

VIG Div.png

 

The distribution of VDIGX is very uneven - up-down a lot.

 

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Participant ○○○

Re: VDIGX for income...

I love this fund!  Have 6 figures invested in the fund and the total return is highly acceptable.  

Gabe

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Explorer ○○○

Re: VDIGX for income...


@ECEPROF wrote:

Here is the 10-year dividend distribution in the form of a chart.

 

VIG Div.png

 

The distribution of VDIGX is very uneven - up-down a lot.


That chart is not of the distributions of VDIGX (Investor's Share Class of Vanguard Dividend Growth fund). It is likely of the distributions of VIG (ETF Share Class of Vanguard Dividend Appreciation Index fund).

The quarterly distributions of the two funds have been different. With VDIGX, the total distribution for the last quarter of 2015 was $0.809 per share and the total distribution for the first quarter of 2016 was $0.0800 per share. The chart does not show that difference between those quarters.

Both of those funds have had uneven quarterly distributions. For some, what matters more is the sum of the income distributions for a year. Here is a chart of the annual income distributions adjusted for inflation for VDIGX and VDAIX (Investor's Share Class of the same fund as VIG) since the first full calendar year that both funds have existed.

inc-vdigx-vdaix-2007-2018.svg

The chart shows that VDIGX has performed slightly better than VDAIX. However, if the funds where held in a taxable account, income taxes would have been owed on the capital gain distributions of VDIGX. VDAIX has not made any capital gain distributions.

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Frequent Contributor

Re: VDIGX for income...


@PatMorgan wrote:

The chart shows that VDIGX has performed slightly better than VDAIX. However, if the funds where held in a taxable account, income taxes would have been owed on the capital gain distributions of VDIGX. VDAIX has not made any capital gain distributions.


I think the only mutual fund now available is the admiral fund VDADX. Check it out on Vanguard site VDADX now has a $3000 minimum.

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Re: VDIGX for income...


@FatKat wrote:


I think the only mutual fund now available is the admiral fund VDADX. Check it out on Vanguard site VDADX now has a $3000 minimum.


I believe ALL Vanguard index funds have become Admiral funds with Admiral ERs and a $3000 min as opposed to $10,000 min from before.  This was done quietly by Vanguard many months ago.

One problem is those wishing to determine the history of any index fund, can only find the shorter Admiral history at Vanguard.  And unless you know the old ticker, it is hard to find it on M* or Portfolio Visualizer.

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Re: VDIGX for income...


@FatKat wrote:

I think the only mutual fund now available is the admiral fund VDADX. Check it out on Vanguard site VDADX now has a $3000 minimum.


Using VDIAX (Investor Shares of the Vanguard Dividend Appreciation Index fund) makes it possible to show more calendar years of historical results, back to 2007 instead of 2014 for VDADX (Admiral shares of the fund).

As Mozart622 mentioned, in 2019 Vanguard eliminated the Investor Shares of index funds and replaced those shares with Admiral Shares.

In the graphs that I have posted, the difference in the results of VDIAX and VDADX would almost certainly not be noticeable. Similar graphs that I post in the future will show the results of Investor Shares through 2018 and Admiral Shares from 2019

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Frequent Contributor

Re: VDIGX for income...

Good point. I just have come to recognize the admiral shares, especially now; I did not think about back testing the funds 

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Contributor ○

Re: VDIGX for income...

For those with accounts at Fidelity and wanting to avoid transaction fees, PRDGX is every bit as good as VDIGX.  

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Re: VDIGX for income...


@cegibbs wrote:

For those with accounts at Fidelity and wanting to avoid transaction fees, PRDGX is every bit as good as VDIGX.  


T. Rowe Price is planning to launch an ETF clone of their Dividend Growth Fund (PRDGX) soon.

Link

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Frequent Contributor

Re: VDIGX for income...

How can you call a fund Dividend Growth when the SP500 has a higher yield?

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Re: VDIGX for income...


@FD1001 wrote:

How can you call a fund Dividend Growth when the SP500 has a higher yield?


The yield is not the reason, it is because the stock dividends grow over time.

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Re: VDIGX for income...


@FatKat wrote:

@FD1001 wrote:

How can you call a fund Dividend Growth when the SP500 has a higher yield?


The yield is not the reason, it is because the stock dividends grow over time.


Fron VG site "This fund is designed to provide investors with some income while offering exposure to dividend-focused companies across all industries"

I bet many investors may think that this fund pays higher income compared to the index because the fund is focused on dividends while the SP500 doesn't.

 

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