DGRO vs VIG: Future Growth vs Proven Track Record
DGRO and VIG both chase the same goal—dividend growth—but they take fundamentally different paths to get there. One looks forward. The other looks back.
iShares' DGRO screens for companies likely to grow dividends. Vanguard's VIG demands proof—10 consecutive years of dividend increases. Here's how to decide between them.
Quick Comparison at a Glance
DGRO: The Forward-Looking Approach
DGRO (iShares Core Dividend Growth ETF) doesn't just look at dividend history—it tries to predict future dividend growth. BlackRock's methodology screens for companies with:
- At least 5 years of consecutive dividend growth
- Strong profitability metrics (earnings quality, ROE)
- Sustainable payout ratios
- Positive earnings growth expectations
The result? A portfolio that includes younger dividend growers that VIG would exclude. Companies like Meta or Salesforce can qualify for DGRO faster than for VIG.
VIG: The Proven Track Record Approach
VIG (Vanguard Dividend Appreciation ETF) takes a stricter stance. To join VIG, a company must have raised its dividend for at least 10 consecutive years. No exceptions. No predictions.
This creates a portfolio of battle-tested dividend raisers—companies that maintained dividend growth through the 2008 financial crisis, the 2020 pandemic, and everything in between.
The Real Difference: Philosophy
Both ETFs have delivered similar long-term total returns. The choice comes down to investment philosophy:
DGRO Philosophy
"We can identify future dividend growers before they've built a 10-year track record. Quality metrics predict dividend growth."
VIG Philosophy
"Past behavior is the best predictor of future behavior. 10+ years of dividend growth shows commitment."
Which One Should You Choose?
Choose DGRO if:
- You want higher current yield (~2.4%)
- You believe in forward-looking metrics
- You want newer dividend growers
- 0.08% expense ratio is acceptable
- You prefer iShares/BlackRock
Choose VIG if:
- You prioritize proven track records
- You want the lowest expense (0.06%)
- You prefer Vanguard's approach
- You want recession-tested holdings
- Lower yield (~1.8%) is acceptable
The 10-Year Math
Starting with $100,000 and reinvesting all dividends:
*Assumes 10% dividend growth for DGRO, 8% for VIG, with 7% capital appreciation for both.
Why Not Both?
Many sophisticated investors hold both. The overlap is significant, but the differences provide complementary exposure.
Popular Combination: 50/50 Split
- 50% DGRO: Captures emerging dividend growers, higher yield
- 50% VIG: Anchors portfolio with proven performers, lower fees
The Bottom Line
Both DGRO and VIG are excellent dividend growth ETFs. You're not choosing between good and bad—you're choosing between two winning philosophies.
If I had to pick one, I'd lean toward VIG for the lower expense ratio and recession-tested holdings. But DGRO's higher yield and faster dividend growth make a compelling case for income-focused investors.
The honest answer? Either works. The best choice is the one you'll stick with for decades.
Calculate Your Dividend Income
See exactly how much dividend income you could generate with DGRO, VIG, or both.