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Three Overlooked Dividend- Growth ETFs That Deliver Long-Term Returns

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  Published in Stocks and Investing on Sunday, December 14th 2025 at 14:04 GMT by 24/7 Wall St

Three Dividend‑Growth ETFs That Are Overlooked – Why You Should Pay Attention

The article “3 Consistent Dividend‑Appreciation ETFs Investors Are Largely Ignoring but They Shouldn’t” on 247WallSt.com argues that many investors fixate on high‑yield funds while neglecting a small but powerful trio of ETFs that prioritize steady dividend growth. By focusing on the quality of dividend increases rather than sheer yield, these funds can deliver superior total return over the long haul. Below is a concise synthesis of the article’s key points, data, and actionable take‑aways.

1. The Case for Dividend Growth

The author opens by contrasting two popular investment mindsets:

Dividend growth is prized because it is tied to a company’s profitability and cash‑flow resilience. When a firm raises its dividend year over year, it signals both confidence and a sustainable earnings base. The article cites studies that show dividend‑growth companies outperform their peers over 20‑year horizons by 3‑5 % annually after adjusting for risk.

2. ETF 1 – Vanguard Dividend Appreciation ETF (VIG)

Core Philosophy
VIG tracks the NASDAQ US Dividend Achievers Select Index, which filters for U.S. companies that have increased dividends for at least 10 consecutive years. This “10‑year rule” ensures that only durable, well‑managed firms are included.

Key Metrics (as of 12/13/2025)
- Expense Ratio: 0.06 %
- Net Expense Ratio: 0.05 %
- Current Yield: 1.9 %
- 5‑Year Annualized Return: 11.3 %
- Dividend Growth Rate (last 10 yrs): ≈12 % per year

Top Holdings
- Apple Inc. (AAPL) – 4.8 % of portfolio
- Microsoft Corp. (MSFT) – 4.5 %
- Johnson & Johnson (JNJ) – 3.2 %
- Procter & Gamble (PG) – 2.8 %

The article stresses VIG’s low fees and broad exposure to technology, consumer staples, and healthcare. Despite its modest yield, the fund’s historical compound growth makes it a “growth‑yield hybrid” that’s particularly attractive for retirement accounts where tax‑advantaged compounding matters.

3. ETF 2 – iShares Core Dividend Growth ETF (DGRO)

Core Philosophy
DGRO tracks the S&P Core Value Dividend Index, comprising U.S. companies with at least 5 consecutive years of dividend increases and a valuation filter (price‑to‑earnings under the 50‑year average). This blend of growth and value targets companies that are both rising in payouts and reasonably priced.

Key Metrics (as of 12/13/2025)
- Expense Ratio: 0.06 %
- Current Yield: 2.2 %
- 5‑Year Annualized Return: 10.9 %
- Dividend Growth Rate: ≈10 % per year

Top Holdings
- Coca‑Cola Co. (KO) – 3.0 %
- Pfizer Inc. (PFE) – 2.8 %
- Home Depot Inc. (HD) – 2.6 %
- Cisco Systems (CSCO) – 2.4 %

DGRO’s blend of value and dividend growth is a niche that many investors overlook, preferring either pure value ETFs (like VTV) or pure dividend ETFs (like VYM). The article argues that DGRO can serve as a “bridge” between those strategies, delivering growth‑oriented yields while staying cost‑effective.

4. ETF 3 – SPDR S&P Dividend ETF (SDY)

Core Philosophy
SDY follows the S&P High Dividend Yield Index but applies a “dividend‑yield filter” that includes only firms that have increased dividends for at least 20 consecutive years. This is the most stringent longevity criterion among the three funds.

Key Metrics (as of 12/13/2025)
- Expense Ratio: 0.35 %
- Current Yield: 3.9 %
- 5‑Year Annualized Return: 9.4 %
- Dividend Growth Rate: ≈8 % per year

Top Holdings
- AT&T Inc. (T) – 4.8 %
- AbbVie Inc. (ABBV) – 4.1 %
- Altria Group (MO) – 4.0 %
- Exxon Mobil Corp. (XOM) – 3.8 %

SDY’s higher expense ratio is offset by its attractive yield and ultra‑stable dividend track record. The article notes that the fund is best suited for income‑focused investors who can tolerate a slightly lower growth rate in exchange for consistent payouts.

5. How to Add These ETFs to Your Portfolio

The author proposes a three‑tier approach:

1. Core Holding (VIG) – 30–40 % of your equity allocation for long‑term dividend growth.
2. Value‑Growth Buffer (DGRO) – 15–20 % to capture upside when valuations dip.
3. Income Anchor (SDY) – 10–15 % for a stable income stream, especially if you plan to use dividends to cover living expenses.

A sample allocation for a 60/40 equity/bond portfolio might look like this:

The article warns that investors should regularly rebalance to keep the dividend‑growth tilt consistent, especially during market corrections when yield‑heavy funds can drift upward.

6. Take‑Away Messages

1. Yield vs. Growth – High yield is not a guarantee of long‑term performance; consistent dividend increases often trump temporary high payouts.
2. Cost Matters – VIG and DGRO’s 0.06 % fees make them excellent cost‑efficient vehicles for dividend growth.
3. Diversify Growth Styles – Mixing VIG (growth), DGRO (value‑growth), and SDY (yield‑growth) gives a rounded dividend‑centric exposure that mitigates risk.
4. Long‑Term Horizon – The real advantage of these ETFs shows up over 10‑20 years, as compounding pushes the total return higher.

7. Final Thoughts

The article concludes that while many investors still chase the “high‑yield” hype, the real winners are those who recognize the power of dividend appreciation. By quietly but consistently increasing payouts, dividend‑growth companies build wealth for shareholders long before market cycles shift. The three ETFs highlighted—VIG, DGRO, and SDY—provide low‑cost, diversified, and historically successful ways to capture that growth. For investors willing to stay the course, adding these funds can turn a yield‑centric strategy into a robust dividend‑growth powerhouse.