Investing in ETFs which invest in regular income generating and wide growth opportunities stocks can be an efficient strategy to have balanced exposure and invest in different sectors without having to pick individual stocks. They typically hold a broad range of companies that pay dividend regularly.
Given the backdrop, let’s look at some of the best-performing ETFs Vanguard Growth Index Fund ETF Shares (VUG), Vanguard Dividend Appreciation Index Fund ETF Shares (VIG), and Schwab U.S. Dividend Equity ETF (SCHD) for a balanced and income oriented portfolio.
Most investors sought for investment alternates which combining growth and regular income prospects and provide balanced exposure. In such case, large cap investments with regular dividend payments emerge as a suitable choice.
With falling prices, inflation pressures are easing leading to reduced fears. However, the current job market has raised concerns in the market. Recently, the Bureau of Labor statistics reported that the U.S. unemployment rate had increased to 4.3% with the economy adding just 114,000 jobs.
However, for of the second quarter of 2024, the GDP of the U.S. grew by 2.8% from the first quarter of 2024 raising hopes for the upcoming quarters supported by rising consumer spending, and business investments. Also, the expected interest rate cuts by the Fed in September add positive insights.
Therefore, a well-diversified portfolio consisting income oriented and growth prospects ETFs could be apt choice for attaining balanced exposure.
Considering these conducive trends, let’s analyze the fundamental aspects of the three best performing ETFs such as VUG, VIG, and SCHD for great returns.
Vanguard Growth Index Fund ETF Shares (VUG)
VUG is an ETF launched and managed by The Vanguard Group, Inc. The fund invests in public equity markets in the United States and target stocks of companies operating across diversified sectors. It invests in growth stocks of large-cap companies. It seeks to track the performance of the CRSP US Large Cap Growth Index.
The fund has assets under management (AUM) of $131.75 billion. VUG’s top holdings include Microsoft Corporation (MSFT) with a 13.02% weighting, followed by Apple Inc. (AAPL) at 12.02%, and NVIDIA Corporation (NVDA) and Amazon.com, Inc. (AMZN) at 11.32% and 4.95%, respectively.
The ETF has a total of 190 holdings, with its top 10 assets comprising 60.01% of its AUM. VUG’s expense ratio is 0.04%, lower than the category average of 0.37%. Over the past month, its fund inflows were $7.79 billion and $11.95 billion over the past year.
VUG pays an annual dividend of $1.88, which translates to a 0.51% yield at the current price level. The fund’s dividend payouts have increased at a CAGR of 5.1% over the past three years. Notably, VUG has paid dividends for 19 consecutive years.
VUG has surged 10.9% over the past six months and 32.8% over the past year to close the last trading session at $372.34. It has a beta of 1.11. The fund’s NAV was $372.51 as of August 15, 2024.
VUG’s POWR Ratings reflect solid prospects. The fund has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
VUG has an A grade for Buy & Hold. It also has a B grade for Trade. Within the B-rated Large Cap Growth ETFs group, it is ranked #12 of the 61 ETFs.
To access all VUG’s POWR Ratings, click here.
Vanguard Dividend Appreciation Index Fund ETF Shares (VIG)
VIG is managed by The Vanguard Group, Inc. The fund holds investments in companies which offers exposure to dividend paying large-cap companies exhibiting growth characteristics within the U.S. equity market. It seeks to track the performance of the NASDAQ US Dividend Achievers Select Index.
The ETF tracks the S&P U.S. Dividend Growers Index. With $80.11 billion in AUM, VIG’s top holdings are Apple Inc. (AAPL) with a 4.48% weighting, Microsoft Corporation (MSFT) at 4.26%, and Broadcom Inc. (AVGO) and JPMorgan Chase & Co. (JPM) at 4.01% and 3.34%, respectively.
The fund has a total of 341 holdings, with its top 10 assets comprising 30.55% of its AUM. It has an expense ratio of 0.06%, lower than the category average of 0.37%. VIG fund inflows were $703.27 million over the past six months and $1.37 billion over the past year.
VIG pays an annual dividend of $3.35, which translates to a 1.78% yield at the current price level. Moreover, the fund’s dividend payouts have increased at a CAGR of 11.6% over the past three years. VIG has raised its dividends for 10 consecutive years.
VIG has gained 8.3% over the past six months and 17.7% over the past year to close the last trading session at $190.64. It has a beta of 0.85. The fund’s NAV was $190.58 as of August 15, 2024.
VIG’s sound fundamentals are reflected in its POWR Ratings. The fund has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The fund has an A grade for Trade, Peer, and Buy & Hold. Of the 280 ETFs in the Large Cap Blend ETFs group, VIG is ranked #5.
Click here to see all the VIG ratings.
Schwab U.S. Dividend Equity ETF (SCHD)
SCHD is a market-cap-weighted fund which invests in companies with a 10-year history of paying dividends. SCHD applies fundamental screens to build its portfolio and focuses on quality companies with sustainable dividends. The fund tracks the Dow Jones U.S. Dividend 100 Index.
The fund has an AUM of $57.43 billion. Its top holdings include Lockheed Martin Corporation (LMT) with a 4.64% weighting, followed by AbbVie, Inc. (ABBV) at a 4.46% weighting, and BlackRock, Inc. (BLK) and Coca-Cola Company (KO) at 4.18% and 4.13%, respectively. SCHD has a total of 101 holdings, with the top 10 assets comprising 41.16% of its AUM.
The fund has an expense ratio of 0.06%, compared to the category average of 0.49%. Over the past six months, SCHD fund inflows came in at $2.16 billion and $3.93 billion over the past year. Also, it has a beta of 0.88.
SCHD pays an annual dividend of $2.83, which translates to a 3.47% yield at the current price level. The fund’s dividend payouts have grown at a CAGR of 12.9% over the past five years. Also, SCHD has raised its dividends for 12 consecutive years.
SCHD has gained 5.6% over the past six months and 10.9% over the past year to close the last trading session at $81.59. The fund has a NAV of $80.74 as of August 14, 2024.
SCHD’s POWR Ratings reflect its strong outlook. The ETF has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
SCHD has an A grade for Buy & Hold, and Trade. It also has a B grade for Peer. The fund is ranked #2 among 89 ETFs in the A-rated Large Cap Value ETFs group.
To access all the POWR Ratings for SCHD, click here.
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VUG shares were trading at $373.38 per share on Friday afternoon, up $1.04 (+0.28%). Year-to-date, VUG has gained 20.41%, versus a 17.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
3 ETFs for a Balanced Growth and Income Portfolio StockNews.com
