VIG vs VOO: Which Vanguard ETF Is Best?

We Compare VIG vs VOO:

We are going to explore the difference between Vanguard Dividend Appreciation ETF (VIG) vs Vanguard S&P 500 ETF (VOO)

Choosing between two funds can be difficult, but I will make it easy for you to decide between VIG and VOO.

 

VIG vs VOO

The primary difference between VIG and VOO is the index they track.  VIG tracks the S&P U.S. Dividend Growers Index, while VOO tracks the S&P 500 Index.

Another significant difference is the number of stocks in each, with VIG having 267 different companies compared to 508 with VOO.

VIG tracks the S&P U.S. Dividend Growers Index

VOO tracks the S&P 500 Index

VIG and VOO also have a different expense ratio of 0.06% vs 0.03%.  This makes both of these ETFs low-cost funds.

VIG

• Fund Inception: 2006
• Offered By Vanguard
• Tracks The S&P U.S. Dividend Growers Index
• Expense Ratio 0.06%
• Number Of Stocks: 267
• Dividend Yield 1.67%

VOO

• Fund Inception: 2010
• Tracks the S&P 500 Index
• Expense Ratio: 0.03%
• Number Of Stocks: 508
• Top 10 Holdings: 30%
• Dividend Yield: 1.27%

 

VIG vs VOO Performance

VIG and VOO have performed similarly over the last 10 years, with VOO outperforming VIG by 1.10% annually.

However, this difference is made up by VIG with its higher dividend yield.

Here is how their performance compares:

Here is another comparison of performance:

As you can see, they have performed almost the same over the long term, with VOO slightly outperforming VIG over 10 years.

 

VIG vs VOO Holdings

There is a significant difference in the number of holdings for VIG and VOO.  VOO includes 508 stocks in the ETF, while VIG holds 267 stocks.

VOO holds 2 times as many companies compared to VIG.

These funds also differ in their sector diversification.

VOO is 27% technology, while VIG is 13.90%.

VOO leaning heavier into the technology sector explains why it has outperformed VIG.

Technology stocks have performed well over the last decade.

With only 267 holdings, VIG’s top 10 comprise 28% of its assets.  VOO’s top 10 holdings make up 25%.

Here are VIG and VOO holdings side-by-side:

The top 10 holdings for VIG make up 28% of its portfolio, while VOO’s top 10 holdings make up 25%.

This means the performance of a few stocks like UnitedHealth, Microsoft, JP Morgan, Johnson & Johnson, and VISA will have a big impact on the overall performance of VIG.

 

VOO vs VIG Overlap

There is an overlap between VOO and VIG that includes 151 stocks. Roughly 30% of VOO’s holdings are in VIG.

Here are VOO and VIG holdings overlap:

There is an overlap by weight of about 36%:

This gives VOO more diversification compared to VIG.

 

VIG and VOO Differences

The main difference between VIG and VOO is that VIG focuses on stocks with a history of increasing dividends, while VOO tracks the performance of the S&P 500 Index, which includes 500 large-cap U.S. companies.

In other words, VIG targets dividend growth, while VOO provides broad exposure to the overall U.S. stock market.

Another major difference between VIG and VOO is that VIG has a higher dividend yield of 1.67% compared to 1.28% with VOO.

VOO holds almost twice as many stocks as VIG, making VOO more diversified.

Here is a comparison chart of VIG vs VOO:

Investing in an ETF with more holdings helps you diversify your portfolio and minimize risk.

Differences between VIG and VOO:

• Company Selection
• Different Number Of Holdings (267 vs 508)
• Level Of Diversification
• Tracking Index

 

VIG Description

Vanguard Dividend Appreciation ETF (VIG) start date is in 2006.  It’s one of Vanguard’s ETFs that seeks to track the performance of the S&P U.S. Dividend Growers Index.

VIG contains large-cap equities and emphasizes holdings with a track record of growing their dividends year over year.

Companies in VIG have a track record of increasing their dividends over time.

It makes sense that VIG has a higher dividend yield (1.67%) compared to other Vanguard ETFs like VOO.

However, Vanguard’s other high-dividend ETF, VYM, has a higher dividend yield.

 

VIG Performance

Vanguard Dividend Appreciation ETF (VIG) has performed well over the last 10 years, but its performance has lagged compared to the S&P 500 Index.

You can expect VIG’s performance to lag compared to other popular Vanguard ETFs, but it makes up for some of that with its higher quarterly dividend payouts.

Over the last 10 years, VIG has returned an average of 12.91% per year.

 

VIG Holdings

Here are the top 10 holdings for VIG:

Vanguard’s VIG comprises Microsoft, Johnson & Johnson, UnitedHealth, JP Morgan, and Procter & Gamble but also provides exposure to over 200 other stocks.

VIG has $78 billion in total net assets.

 

VOO Profile

• Fund Inception: 2010
• Expense Ratio: 0.03%
• Number Of Stocks: 508
• Top 10 Holdings: 30%
• Equivalent Institutional Fund (VIIIX)

Vanguard’s S&P 500 ETF (VOO) launched in 2010 and is now a very popular Vanguard ETF.

The fund tracks the performance of the S&P 500 index, which holds the 500 largest U.S. stocks, weighted by market capitalization.

The S&P 500 usually serves as a benchmark for measuring the performance and overall health of the U.S. stock market.

Vanguard S&P 500 ETF attempts to duplicate the result of its underlying S&P 500 index by investing almost 100% of its assets in the same securities held in the index.

Each stock in the fund holds almost the same proportion of its weighting in the S&P 500 index.

VOO has a heavy large-cap weighting toward both growth and value stocks.

This is another way to say that its holdings are not just focused on the large-cap value category of the U.S. market but also the large-cap growth sector.

 

VOO Performance

Vanguard’s VOO aims to have the same performance returns as the S&P 500 index.

Therefore, VOO and the S&P 500 should always overlap.

 

VOO Holdings

Here are the top 10 holdings for VOO:

Vanguard’s VOO comprises Apple, Microsoft, Alphabet, Amazon, and Tesla and provides exposure to over 500 other stocks.

VOO has $731 billion in total net assets.

 

VIG vs VOO What’s The Difference?

The primary difference between VIG and VOO is that VIG focuses on stocks with a history of increasing dividends, while VOO tracks the performance of the S&P 500 Index, which includes 500 large-cap U.S. companies.

In other words, VIG targets dividend growth, while VOO provides broad exposure to the overall U.S. stock market.

Another major difference between VIG and VOO is that VIG has a higher dividend yield of 1.67% compared to 1.28% with VOO.

VOO holds almost twice as many stocks as VIG, making VOO more diversified.

Both VOO and VIG are Vanguard exchange-traded funds (ETFs).

VOO has a more diverse set of holdings compared to VIG.

The top 10 holdings for VIG make up 28% of its portfolio, while for VOO, 25%.

This has led to better performance from VOO, but it doesn’t guarantee that it will continue.

 

No Minimum Investment

VOO and VIG are exchange-traded funds (ETFs), so there is no minimum investment.  Investors looking to buy fractional shares can use platforms like M1 Finance.

Normally, fractional shares are not available for ETFs, but with M1 Finance, you can purchase fractional shares with no commission.

Buying fractional shares allows you to maximize your investment.

There are two easy ways to invest in VIG or VOO commission-free.

1. Vanguard
2. M1 Finance (Use this link for $100 when you open a new account)

Both of these options are free.  This is important because fees can lower our returns.

M1 Finance is the best option because it lets you purchase VIG, VOO, and thousands of other stocks.

I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.

Personal Capital’s free tools allow you to easily find which of your investments has high fees so you can switch them to low-cost options.  (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)

 

Which Is Better VOO or VIG?

VOO has been better compared to VIG over the last 10 years.  VOO offers more diversification and a lower expense ratio.  It also has a similar performance over the long term.

VOO provides some higher returns due to the higher proportion of technology stocks.

This outperformance of growth stocks might not continue since, over the long term, value stocks tend to outperform.

VIG offers stable performance and holds companies that increase their dividend yield over time.

VOO offers stable performance and higher diversification.

If having a larger basket of stocks helps you sleep at night, VOO would be a better option.

If you seek the highest possible dividend yield and are comfortable with lower returns, VIG might be a better option.

Lastly, it’s important to consider costs and fees because they can cost you in the long run.  That’s why purchasing and selling your shares commission-free is so important.

You can buy and sell these ETFs commission-free on Vanguard’s platform or using  M1 Finance.

 

Is VIG or VOO Better for Financial Independence?

VIG and VOO have performed well enough to get you to Financial Independence Retire Early (FIRE).  They have performed well over the last 10 years and have low expense ratios.

Lower fees are a guaranteed way to keep more money in your portfolio!

Being part of the FIRE community, we aim for the highest return and diversification.

Calculate Your FI Number With My Free FIRE Calculator

For those reasons, I prefer VOO over VIG.

It’s important to note that VIG might be better held in tax-advantaged accounts like a Roth IRA.

The higher dividend payouts can cause a tax drag on your portfolio while in the accumulation phase of financial independence.

Related Posts:

• VYM vs VOO
• SCHD vs SPHD
• SCHD vs DGRO
• VB vs VBK
• VIOV vs VBR

My winner is VOO, based on the increased holdings and the lower expense ratio.

VIG is still a strong option, especially if you pair it with other funds.

You can consider pairing these ETFs with other funds to increase diversification, such as the FIRE community’s favorite VTSAX.