You Wouldn't Believe How Much Vanguard Dividend Appreciation Has Paid Its Shareholders

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Smart investors look closely at dividend-paying stocks, and exchange-traded funds can be a great way to concentrate on the best dividend opportunities in the market. The Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) seeks out high-quality dividend stocks with long track records of dividend growth, and so it's not surprising to see the ETF paying its shareholders more year in and year out.

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Yet the pace at which its dividends have grown is impressive, with the fund on track to pay more than $610 million in dividends this year. The dividend ETF remains on an upward track to enjoy continued growth well into the future.

What Vanguard Dividend Appreciation has paid its investors

The amount that Vanguard Dividend Appreciation has distributed as dividend payouts to its shareholders has gone up substantially. Looking back over the past 10 years, the fund's popularity shows up clearly in its assets under management, as well as its rising overall dividend payments.

Fiscal Year

Dividend Distributions Paid

Assets Under Management

2018 (as of July 30)

$306.6 million

$30.82 billion

2017

$576.2 million

$27.99 billion

2016

$553.6 million

$22.86 billion

2015

$492.3 million

$24.84 billion

2014

$402.8 million

$22.24 billion

2013

$332.8 million

$15.92 billion

2012

$191.7 million

$11.88 billion

2011

$93.9 million

$6.41 billion

2010

$38.8 million

$2.53 billion

2009

$18.1 million

$1.19 billion

This Vanguard ETF's fiscal year runs from Feb. 1 to Jan. 31, so the figure listed for fiscal 2018 above is as of the six-month mark. Multiply that number by two to get a sense of what the full-year payout will be, and you get roughly $613 million in dividend distributions.

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How does Vanguard Dividend Appreciation keep its payouts rising?

Several things have come together to make it easier for Vanguard Dividend Appreciation to fulfill its promise of rising payouts. Considerable inflows have helped to bolster total assets under management, and a generally rising stock market has also given fund performance a boost. You can see that the fund now manages about 25 times what it did less than a decade ago.

Moreover, the entire purpose of the Vanguard Dividend Appreciation ETF is to look for stocks that will raise their dividends consistently over the long haul. Some dividend investors prefer funds that merely pay the highest possible yield, but this more patient approach can lead to longer-term gains. Indeed, over the same time frame, the fund now pays out about 30 times more in dividends than it did 10 years ago, showing the pace of dividend growth has been faster than asset growth.

Yet when you look at more recent years, you can see a somewhat troubling trend. The rate of dividend increases has slowed considerably, and the ETF now has assets under management outpacing dividend growth. The fund even saw assets shrink during 2015, as energy stocks, in particular, suffered tough times that led to dividend decreases among many players in the industry.

Can Vanguard Dividend Appreciation keep growing?

Beyond the health of dividend growth stocks, some investors are simply nervous about the bull market's future, in general. After more than eight years of advances, the stock market has gained a huge amount of ground without seeing many major moves downward along the way. Now that the Federal Reserve has started to raise interest rates, it's possible that some of those who've used dividend stocks in their portfolios will turn back to more conservative investments for income.

Those who've invested in Vanguard Dividend Appreciation for a long time know that the long-term positions that the fund holds have been strong contributors to overall returns. For those with a long time horizon, Vanguard Dividend Appreciation has been a solid core holding, and the stocks that the fund tends to own are well-suited for tough market environments.

Vanguard Dividend Appreciation has been a great choice for dividend investors. Even with some concerns on the horizon, the ETF should keep being able to boost its dividend payouts over time and reward its shareholders for their loyalty.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.