One ETF Replaces Your Whole Dividend Growth Portfolio

Okay dividend growth investors, here’s the deal: your investment philosophy kinda sucks. Sure, it’s better than having a portfolio consisting on Netflix, Amazon, and Tesla, but it’s not great. There’s a few problems that I have with the whole process, including the focus on the dividend, (and the lack of focus on total return, which is far more important) the lack of small cap and value names in a portfolio, and the love of names that make products investors are familiar with, like Pepsico, Proctor and Gamble, Exxon, or Walmart.

Dividend growth investors always forget to realize that you can create your own dividend growth vehicle by investing in a preferred share or bond which yields 6% and just reinvest those dividends every year. Boom, I just grew your dividends 6% a year without doing a thing. But hey, keep thinking your method is the best.

Anyway, good news for all the dividend growth investors who follow me. I wrote a little piece over at Seeking Alpha on how easy it is to replace your painstakingly picked dividend growth portfolio. One ETF has provided superior returns as well as a growing dividend, and it does it all for a management expense fee of just 0.10%.

Now that I’ve freed up a lot of time, I suggest dividend growth investors get a different hobby. Like reading all my archives. Or golf. Or a mistress. Hey, whatever floats your boat.

Tell everyone, yo!

11 thoughts on “One ETF Replaces Your Whole Dividend Growth Portfolio

  • December 20, 2013 at 8:32 pm

    Is VIG even available in Canada?

    I think the allure of dividend stocks or funds, is not having to sell any stocks in order to receive a monthly income and slow steady growth. It might not be the most absolute ideal way to do it. But some people feel comfort in investing that way. The investing world is so complicated. Any starting out investor can start ultra low cost dividend investing with a Computershare account and joining a Drip club. I did not look up what Vanguard charges per purchase. If you buy through your bank that could be $29.00 / trade, if you don’t qualify for lower rates.

    • December 22, 2013 at 12:05 pm

      VIG is available for Vanguard USA (you can buy it via Questrade) but there is no equivalent Canadian-version of VIG.

  • December 21, 2013 at 7:58 am

    Good post Nelson.

    @Paul, yes, you can buy VIG in Canada using a discount broker.

    For what it’s worth, investing more myself in ETFs like VIG, VTI. I don’t have time to research and follow 40 stocks.


  • December 21, 2013 at 10:36 am

    I like ETFs, but I have yet to create my whole portfolio out of them. I think that a lot of people preach about dividend investing, but not too many fully understand how they can maximize their strategies. This is a great post Nelson, I’m going to share it next Friday on our Dinks Finance roundup. Have a great weekend and Happy Holidays.

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  • January 3, 2014 at 1:35 pm

    Ick. That Seeking Alpha site is a nightmare. Anti-Adblock messages and force sign-up to read an article. Fail.

  • January 3, 2014 at 5:47 pm

    @ Chris
    have to agree with that comment.
    Not the type of link I would expect from FU.

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