Since the tremendously popular Vanguard Dividend Growth Fund closed its doors to new accounts in July, many investors have scrambled to find a similar stock fund. Vanguard stopped accepting new investors after assets nearly doubled over the past three years, topping $30 billion. The fund focuses on stocks of giant companies that are able to keep raising dividends.
The fund’s 9% annualized returns over the past 10 years put it in the top 3% of its fund category. Stock investors seeking income and relatively low volatility need to be cautious because many stocks in this category have surged and now are very expensive.
Attractive no-load funds with similar approaches…
T. Rowe Price Dividend Growth (PRDGX) closely resembles the Vanguard fund, with some of the same top holdings and similar sector weightings. It’s nearly twice as expensive (0.64% annual expense ratio versus 0.33% for the Vanguard fund), which accounts for slightly lower returns. 10-year performance: 8.4%.
Vanguard Dividend Appreciation ETF (VIG) tracks the Nasdaq US Dividend Achievers Select Index, composed of stocks that have increased dividends in each of the past 10 years. The exchange-traded fund charges a low expense ratio of 0.09%, but some of its holdings have become very pricey. 10-year performance: 7.9%.