Is the Vanguard Dividend Appreciation ETF a Buy Now?

This income fund has been underperforming, but the reason may be to change

Is it time to add more exposure to dividend stocks

The market doesn't seem to think so

And that's adding any reinvested dividends paid in the meantime into the mix

With the global economy as well as the market itself seemingly taking on a different tone right now, have dividend-focused funds VIG become a more compelling buy

Actually, they have (noteworthy indeed)

Here's the deal (something worth watching)

Additionally, Time for change It's no real surprise that dividend payers have lagged the broad market

A handful of growth nology stocks with a presence in the artificial intelligence have been investors' favorite names for over a couple of years now, even at the expense of dividend stocks and value stocks (which often overlap)

Interest rates have edged higher since then as well, adjusting dividend yields by pressuring dividend stock prices lower

What the re reveals is 's not exactly been an ideal environment for these tickers

Additionally, Conversely, As the old adage goes, though, nothing lasts forever (quite telling)

Moreover, The winds of cyclical change seem to be blowing (fascinating analysis)

That's how Morningstar analyst David Sekera feels, anyway, amid market uncertainty

Based on the extreme valuation disparity between growth stocks and value stocks right now, in Morningstar's recently published Q3 2025 outlook he notes: "Not only are value stocks undervalued on an absolute basis, but they also remain near some of the most undervalued levels relative to the broad market over the past 15 years

In a market that is becoming overvalued, we see value in the relatively higher dividend yields found in the value category

At the same time, " Image source: Getty Images

Furthermore, And Sekera isn't alone, amid market uncertainty

Re from JPMorgan Asset Management's analysts posted late last year plainly states "the [global] outlook for dividends is now stronger than at any point in recent history, considering recent developments. " Specifically citing historically low payout ratios, the report goes on to say "global equities are now on the cusp of a remarkable period of dividend growth, with not just a cyclical upswing in payouts, but structurally higher dividend momentum

Additionally, " The underlying scenario isn't quite as extreme within the U, in light of current trends

Market that supplies the Vanguard Dividend Appreciation ETF with its constituents

But the domestic situation is still leaning in the same direction as the rest of the world's

Always good, but even better right now So what exactly is the Vanguard Dividend Appreciation ETF, given current economic conditions

Nevertheless, Just as the name suggests, it's a fund largely purposed to duce reliable dividend growth

In contrast, Dividend Growers Index, this ETF owns the United States' highest-yielding stocks with a minimum of 10 consecutive years of annual dividend growth, in today's market environment

That's not huge; you can certainly find bigger yields than that (quite telling)

Conversely, But again, that's not the chief goal of this fund

This leads to the conclusion that Vanguard Dividend Appreciation ETF is first and foremost meant to grow its payout, and it does this plenty well

On the other hand, Meanwhile, Great dividend payers also tend to duce solid capital gains anyway

Hartford's analysts conclude "corporations that consistently grow their dividends have historically exhibited strong fundamentals, solid plans, and a deep commitment to their holders, in light of current trends. " And curiously, in line with the S&P U

Dividend Growers Index's apach to selecting its constituents, Hartford's data digging also suggests that stocks with the very highest yields and highest payout ratios aren't actually the very best performers

At the same time, This high degree of cash distribution often just isn't sustainable, dramatically undermining these stocks' values (noteworthy indeed)

On the other hand, Nevertheless, It's also worth mentioning that Hartford's reers see the same low overall payout ratios that JPMorgan Asset Management's analysts see, against a backdrop of record corporate fits, amid market uncertainty

Still not for everyone, but

Nevertheless, But you just don't need dividends

Don't buy this ETF (something worth watching), given current economic conditions

As much cyclical upside as it might offer right now, if you're truly thinking long-term growth, you should bably own a true growth fund instead

Moreover, And if for some reason you need a higher dividend yield right out of the gate, don't be afraid to pass on this particular ETF, given current economic conditions

Moreover, VIG is more of an all-around income fund with modest risk and above-average safety (for an equity ETF, anyway), given current economic conditions

If your long-term goal is to establish a position now that's capable of growing its dividend payments to sizable levels in the distance future, though -- particularly if you're going to be re any dividends paid in the meantime -- this is a great option

Furthermore, It and its underlying stocks' current prices don't fully reflect the perked-up pace of global dividend growth that JPMorgan says is in the cards

The Author James Brumley is a contributing Motley Fool Stock Market Analyst covering publicly traded companies in the consumer staples and consumer discretionary sectors (an important development)

On the other hand, Prior to The Motley Fool, James was a licensed stockbroker with Charles Schwab, and a registered investment advisor, considering recent developments

In Management with specializations in Finance and Marketing from Transylvania University, in today's financial world

After 20 years of fessional experience in and around the stock market, James' apach is one that combines fundamentals, sentiment, and common sense

This leads to the conclusion that 's also an apach that respects this John Keynes reality: The market isn't always rational

In his spare time, he enjoys playing disc golf and gardening

TMFjbrumley X @jbrumley JPMorgan Chase is an advertising partner of Motley Fool Money

James Brumley has no position in any of the stocks mentioned

This tells us that Motley Fool has positions in and recommends JPMorgan Chase and Vanguard Dividend Appreciation ETF

However, The Motley Fool has a disclosure policy.