The Vanguard Dividend Appreciation (VIG) ETF is bouncing back after it dropped to a multi-month low of $146 in March. It has jumped by 7% since then and is hovering at the highest level since February 17 of this year. Notably, the VIG ETF has outperformed the SCHD, which I wrote about here.
VIG is one of the best blue-chip ETFs
The Vanguard Dividend Appreciation ETF is one of the best funds you can invest in today. It is a popular fund with over $65 billion in assets and an expense ratio of just 0.06%. The fund invests in blue-chip companies that have a long track record of growing its dividends. Precisely, it looks at firms that have grown their payouts in ten years. As such, it can be seen as a mini version of the dividend aristocrats’ ETF.
The VIG ETF is a well-diversified fund with financials having a 21% share in the fund. Financials are followed by technology, health care, industrials, and consumer defensive. The biggest companies in the fund are UnitedHealth, Microsoft, JP Morgan, Johnson & Johnson, Visa, and Procter & Gamble. All these are market-leading companies that have a substantial market share in their industries.
The VIG ETF stock will next react to two main things. First, it will react to the upcoming earning season that starts on Friday when big banks publish their earnings. Most analysts expect that corporate earnings dropped sharply in Q1 as inflation bets jumped.
Second, and most importantly, the next actions of the Fed will have a impact on the fund. There are signs that the Fed will start pivoting soon. For one, minutes published this week showed that some Fed members favored pausing in March.
Watch here: https://www.youtube.com/embed/r1JaQ_7pPC8?feature=oembed
And with inflation falling and recession odds rising, the fact is that the Fed is about to start hiking interest rates. This also explains why the US dollar index and bond yields have slumped. Therefore, holding a good dividend ETF that has a yield of over 4% seems like a good idea. I believe that the Vanguard Dividend Appreciation Fund has more upside from here.
VIG ETF stock price forecast
VIG chart by TradingView
The daily chart shows that the VIG ETF stock has been rising in the past few days. In this period, it has jumped from a low of $146 to over $156. Along the way, it has moved above the 50-day and 200-day moving averages. Momentum oscillators have also pointed upwards.
Therefore, I believe that this ETF will continue rising as buyers target the next key resistance point at $160, the highest point on December 12. As such, I believe that VIG is a better buy than the SCHD ETF for now. As I wrote, SCHD’s technicals were less supportive since it has formed a double-top pattern.
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