VIG vs DGRO: Comparing Dividend Growth ETFs

Vanguard Dividend Appreciation ETF (VIG) and iShares Core Dividend Growth ETF (DGRO) are the two dominant ETFs in the dividend growth category. While high-yield ETFs like SCHD and VYM focus on stocks with generous current yields, VIG and DGRO focus specifically on companies with track records of growing their dividends. This makes them ideal for investors who prioritize rising income and total return over maximum current yield.

Both ETFs are excellent, but they differ in methodology, holdings, and yield characteristics. This comparison helps you decide which aligns better with your investment goals — or whether owning both makes sense as part of a diversified dividend strategy.

Investment Strategy

VIG tracks the S&P U.S. Dividend Growers Index (formerly the NASDAQ U.S. Dividend Achievers Select Index). It requires companies to have increased dividends for at least 10 consecutive years. It excludes the top 25% highest-yielding eligible stocks to avoid yield traps — companies with unsustainably high yields that may be headed for a cut. The remaining stocks are weighted by market capitalization. This gives VIG a growth-quality orientation with a deliberate avoidance of the riskiest high-yield names.

DGRO tracks the Morningstar US Dividend Growth Index. It requires only 5 consecutive years of dividend increases — a lower bar than VIG — but adds quality screens: the payout ratio must be below 75%, and the company's estimated earnings growth must be positive. This combination of a shorter streak requirement with fundamental quality screens results in a different (and often broader) portfolio than VIG, with approximately 400+ holdings versus VIG's 300+.

Holdings and Sector Exposure

VIG's top holdings typically include Microsoft (MSFT), Apple (AAPL), JPMorgan Chase (JPM), UnitedHealth Group (UNH), and Broadcom (AVGO). The fund is well-diversified across sectors, with meaningful allocations to technology, financials, healthcare, industrials, and consumer staples. Because it is market-cap weighted, the largest dividend growers dominate.

DGRO's top holdings overlap significantly with VIG but include some names that VIG excludes due to its 10-year requirement. Companies with 5 to 9 years of consecutive increases can appear in DGRO but not VIG. DGRO also tends to have slightly heavier financial sector exposure and slightly less technology exposure than VIG. Both ETFs exclude REITs.

Yield and Dividend Growth

DGRO typically offers a slightly higher yield than VIG — roughly 2.3% to 2.6% versus 1.8% to 2.2% for VIG. This is partly because DGRO's lower streak requirement allows inclusion of some higher-yielding stocks that have not yet reached 10 years of consecutive increases. Both ETFs have delivered strong dividend growth, typically 8-12% per year, significantly outpacing inflation.

VIG's exclusion of the top 25% highest-yielding stocks means it deliberately avoids the dividend payers most at risk of cutting. This conservative approach results in a lower yield but potentially more reliable income. DGRO compensates with its payout ratio screen, which filters out companies stretching to maintain their dividends. Both approaches are sound; they simply draw the risk management lines in different places.

Performance Comparison

Performance between VIG and DGRO has been remarkably similar since DGRO's 2014 launch. Both have delivered total returns in the range of 10-12% annually, closely tracking the S&P 500 while providing meaningfully higher dividend income. VIG has a slight edge in some periods due to its heavier technology weighting, while DGRO has a slight edge in others due to its higher yield. The differences are small enough that choosing between them based on past performance alone is not particularly useful.

Where both truly shine is in their risk-adjusted returns. During market downturns, dividend growth stocks tend to fall less than the broader market. VIG and DGRO both demonstrated this during the 2020 selloff and the 2022 bear market, providing relative stability when growth stocks were getting hammered.

Costs

VIG charges 0.06% per year. DGRO charges 0.08% per year. Both are exceptionally cheap, and the 0.02% difference amounts to just $0.20 per year on a $1,000 investment. Cost is essentially a tie and should not be a deciding factor.

Which Should You Choose?

Choose VIG if: You want the most established dividend growth ETF with the longest track record, managed by Vanguard. VIG's 10-year streak requirement provides a stricter quality filter, and its exclusion of highest-yielding stocks adds a layer of safety. It is the conservative choice within the dividend growth category.

Choose DGRO if: You want a slightly higher yield, broader diversification across 400+ holdings, and exposure to younger dividend growers (5-9 year streaks) that VIG excludes. DGRO's payout ratio and earnings growth screens provide quality assurance without requiring a decade-long track record.

Own both if: VIG and DGRO complement each other well, with enough differentiation in holdings to justify owning both. Pair either or both with a high-yield ETF like SCHD for a comprehensive dividend ETF portfolio. See our SCHD vs. VYM comparison for the high-yield side of the equation. For guidance on combining these into a complete portfolio, read our guide on building a dividend portfolio.