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Yahoo
2 hours ago
- Business
- Yahoo
Why Constellation's News Drove Fluor, Centrus, and Vistra Stocks Higher
Constellation Energy just signed a 20-year deal to provide nuclear power to Meta Platforms. The company's Clinton Clean Energy Center nuclear power plant in Illinois will supply as much as 1.1 GW of nuclear energy to Meta. Investors are flocking to nuclear stocks today -- but they seem to have dropped Constellation stock like a hot rock. 10 stocks we like better than Constellation Energy › I assume you've heard the news by now? Nine months after announcing plans to restart Three Mile Island Unit 1 and use it to provide nuclear power to Microsoft server farms, Constellation Energy (NASDAQ: CEG) is doing it again -- announcing it's signed a similar deal with Meta Platforms (NASDAQ: META). Investors reacted immediately, bidding up Constellation shares as much as 15% pre-market open today (although the stock has given back its gains, and is now flat against yesterday's close). In contrast, all sorts of other nuclear stocks are surging today. Constellation rival Vistra (NYSE: VST) gained 4.4% through 11:10 a.m. ET today. Nuclear plant construction firm Fluor (NYSE: FLR) stock is up 5.1%. And uranium fuel enricher Centrus Energy (NYSEMKT: LEU) is doing best of all -- up 7.1%! Constellation described its latest nuclear power deal in a press release this morning. Instead of 3 Mile Island, the company will use its Clinton Clean Energy Center (CCEC) nuclear power plant in Illinois to provide power to Meta's server farms. Beginning in June 2027 and extending out 20 years, the company will provide 1,121 megawatts (more than 1.1 gigawatts) of clean nuclear energy to Meta. The deal will support Constellation's plans to increase power output at CCEC by 30 megawatts. It will also extend the service life of the CCEC nuclear plant, which was first slated to close in 2017, and then had its lifespan prolonged through mid-2027, well into the 2040s. Furthermore, Constellation noted that if power demand justifies it, the company might "extend the plant's existing early site permit or seek a new construction permit from the Nuclear Regulatory Commission to pursue development of an advanced nuclear reactor or small modular reactor (SMR) at the Clinton Clean Energy Center site." So you can see why investors were so happy about Constellation's news this morning. For Constellation itself, the plan promises to leverage an existing investment and decades of sunk costs, to earn at least another 22 years' worth of profits for its shareholders. (For context, Constellation earned $3.7 billion from its power business last year.) But the news has broader implications for the nuclear power industry as well. Earlier this year, as you may recall, nuclear stock investors got something of a shock when it was reported that Microsoft might be hedging its bets on future demand for artificial intelligence (AI) services, and for the kind of power agreements it signed with Constellation to support them. Microsoft was reported to have canceled "a couple of hundred MWs" worth of data center leases in the United States, and to have "pulled back" on projects to lease new data center space. Granted, one theory behind the pullback was that Microsoft wasn't able to find enough power for new data centers. But a secondary theory -- one concerning to nuclear investors -- was that Microsoft might not see enough future demand for AI to justify buying additional power even if it is available. Today's power supply agreement between Meta and Constellation, however, would appear to allay those concerns somewhat. Maybe Microsoft doesn't see a need for a lot of additional nuclear power, beyond what it's already contracted for. But Meta definitely does, and has just signed up to pay for it. Now investors have to figure out how to react to this good news. Should you do that by buying Fluor stock, which helps build nuclear power plants? Or perhaps Centrus, which helps fuel them? Or is Vistra the better buy, as a direct competitor to Constellation and a presumed beneficiary of any trends that bolster Constellation? That's not quite as easy a question to answer as it should be, however. At first glance, Fluor stock looks like the obvious buy. Priced under 4 (!) times earnings, Fluor stock certainly looks a lot cheaper than Centrus stock, which costs more than 19 times earnings, or Vistra, which costs more than 26.5 times earnings. Fluor's earnings are currently inflated by one-time accounting gains related to its NuScale subsidiary, however. Once those gains roll off the back end next year, though, the stock's valuation will rise to a more reasonable-looking 17.5 times forward earnings. If you're contemplating an investment in Fluor, make sure to focus on that number. Vistra stock, meanwhile, only recently turned profitable again. But it's growing like wildfire, earning $1.5 billion in 2023 and $2.6 billion in 2024 -- and expected to keep growing earnings in excess of 20% annually over the next five years. Vistra's dividend yield is tiny, only 0.5%, and its debt load is large. Still, I have a hunch it will make for a simpler investment than Fluor. But Centrus is the investment that intrigues me most. Valued at just a $2.1 billion in market cap, Centrus has arguably the best growth prospects ahead of it as nuclear power becomes more popular. Profitable and with earnings expected to roughly double over the next four years, to more than $8 a share, resulting in about a 25% growth rate, tiny Centrus Energy just might be your best nuclear bet. Before you buy stock in Constellation Energy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Constellation Energy wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $842,015!* Now, it's worth noting Stock Advisor's total average return is 987% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Rich Smith has positions in Meta Platforms. The Motley Fool has positions in and recommends Constellation Energy, Meta Platforms, and Microsoft. The Motley Fool recommends NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Why Constellation's News Drove Fluor, Centrus, and Vistra Stocks Higher was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
17 hours ago
- Business
- Yahoo
This ETF Could Turn $500 Per Month Into a $851,000 Portfolio Paying $30,000 in Annual Dividend Income
This ETF invests in high-quality dividend stocks. It currently offers a high yield, despite a 12.2% annualized return since 2011. It's one of the simplest and most effective ways to build a portfolio of high-quality dividend payers. 10 stocks we like better than Schwab U.S. Dividend Equity ETF › Many investors aspire to build a portfolio that can pay them enough in dividends to fund their retirement goals. If you can find stocks that consistently raise their dividends, typically offsetting the impact of inflation and then some, you could find yourself in the enviable position where you can leave your principal investment untouched. Instead, you get to live off your dividends and pass along your stocks to your heirs or donate them to charity. But building a portfolio of high-quality dividend stocks isn't easy. Fortunately, there's one exchange-traded fund (ETF) that can take care of it for you. And if you invest early and consistently until retirement, you could end up with a portfolio worth over $850,000 that pays out around $30,000 in annual dividends. Two simple factors that can help investors find companies that are likely to raise their dividends in the future are management's history of dividend increases and the company's financial health. If management has consistently increased the dividend and has the financial ability to keep doing so, it's very likely to continue the streak. That's why the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is an effective way to invest in high-yield dividend growth stocks. The index fund follows the Dow Jones U.S. Dividend 100 Index, which selects 100 stocks that have each increased their dividend annually for at least 10 consecutive years. It ranks each eligible company by several criteria: the ratio of free cash flow to debt, return on equity, dividend yield, and dividend growth rate. The top 100 companies (based on a composite ranking of all four criteria) are included in the index and weighted by market cap. As of this writing, the 10 largest companies (and their dividend yields) in the index are as follows: Coca-Cola (2.8%) Verizon Communications (6.2%) Altria (6.8%) Cisco Systems (2.6%) Lockheed Martin (2.8%) ConocoPhillips (3.7%) Home Depot (2.5%) Chevron (5.1%) Texas Instruments (3%) Abbvie (3.6%) As you can see, you get a mix of high-yield dividend stocks along with stocks that have strong growth supporting future payout increases. The result is a combined yield of about 4% based on trailing-12-month distributions from the ETF. But the forward yield should be even higher considering most constituents will pay out more over the next year than the previous year. With an expense ratio of just 0.06%, the cost of investing in this ETF is low and in line with some of the most popular index funds on the market. The Dow Jones dividend index's decision to weight constituents by market cap (with a 4% weight limit) makes it a very efficient index to track, and it lowers the risk tied to any high-yield stocks that aren't as fundamentally sound as the screener suggests. If the market bids down the value of those stocks, they will comprise a lower percentage of the index over time, while the high-quality businesses rise to the top. Consistently investing $500 per month into the Schwab U.S. Dividend Equity ETF will eventually produce a sizable portfolio. Automatically reinvesting the quarterly distribution from the ETF will ensure a good total return on your investments as you accumulate shares over time. Since its inception in 2011, the fund has produced an annualized total return of 12.2%. That's an exceptional performance, but it's also worth pointing out the S&P 500 index has beaten the ETF with an annualized total return of 14.5%. The gap between the two has widened recently due to the outperformance of growth stocks since 2023. Historically, the S&P 500 averages returns around 10% per year, and 9% is more appropriate as a conservative estimate of the ETF's annual total return. The ETF's 4% distribution yield is also relatively high, but it may come down over time as the Federal Reserve lowers interest rates. That said, there's no telling what prevailing interest rates will be well into the future. A 3.5% yield is a reasonable estimate for the ETF's future yield. With those assumptions in mind, here's how a $500 monthly investment in the Schwab U.S. Dividend Equity ETF could grow over time if you automatically reinvest dividends. Years Investing Portfolio Value Forward Dividend Payment 1 $6,245 $219 5 $37,368 $1,308 10 $94,862 $3,320 15 $183,323 $6,416 20 $319,431 $11,180 25 $528,851 $18,510 30 $851,070 $29,787 Calculations by author. There are a few important caveats to the above scenario. First of all, it's based on forecasts for expected returns and dividend yields that could be well off the mark. More importantly, those returns won't be linear over time. The market is full of ups and downs. The sequence and size of those ups and downs could have a tremendous impact on the final result of your investments. That said, the longer your holding period, the more likely your results will look like the table above. Another important consideration is the impact of inflation: $30,000 won't have the same buying power in 30 years as it has today. That means investors will have to adjust their expectations or strategy if they want future purchasing power equivalent to $30,000 today. That could mean consistently increasing the monthly contribution, for example. While your actual results may vary from the above table, the key takeaway for most investors is to get started and remain consistent. The Schwab U.S. Dividend Equity ETF is a great option if you seek dividend growth and income in retirement. Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Chevron, Cisco Systems, Home Depot, and Texas Instruments. The Motley Fool recommends Lockheed Martin and Verizon Communications. The Motley Fool has a disclosure policy. This ETF Could Turn $500 Per Month Into a $851,000 Portfolio Paying $30,000 in Annual Dividend Income was originally published by The Motley Fool
Yahoo
18 hours ago
- Business
- Yahoo
This ETF Could Turn $500 Per Month Into a $851,000 Portfolio Paying $30,000 in Annual Dividend Income
This ETF invests in high-quality dividend stocks. It currently offers a high yield, despite a 12.2% annualized return since 2011. It's one of the simplest and most effective ways to build a portfolio of high-quality dividend payers. 10 stocks we like better than Schwab U.S. Dividend Equity ETF › Many investors aspire to build a portfolio that can pay them enough in dividends to fund their retirement goals. If you can find stocks that consistently raise their dividends, typically offsetting the impact of inflation and then some, you could find yourself in the enviable position where you can leave your principal investment untouched. Instead, you get to live off your dividends and pass along your stocks to your heirs or donate them to charity. But building a portfolio of high-quality dividend stocks isn't easy. Fortunately, there's one exchange-traded fund (ETF) that can take care of it for you. And if you invest early and consistently until retirement, you could end up with a portfolio worth over $850,000 that pays out around $30,000 in annual dividends. Two simple factors that can help investors find companies that are likely to raise their dividends in the future are management's history of dividend increases and the company's financial health. If management has consistently increased the dividend and has the financial ability to keep doing so, it's very likely to continue the streak. That's why the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is an effective way to invest in high-yield dividend growth stocks. The index fund follows the Dow Jones U.S. Dividend 100 Index, which selects 100 stocks that have each increased their dividend annually for at least 10 consecutive years. It ranks each eligible company by several criteria: the ratio of free cash flow to debt, return on equity, dividend yield, and dividend growth rate. The top 100 companies (based on a composite ranking of all four criteria) are included in the index and weighted by market cap. As of this writing, the 10 largest companies (and their dividend yields) in the index are as follows: Coca-Cola (2.8%) Verizon Communications (6.2%) Altria (6.8%) Cisco Systems (2.6%) Lockheed Martin (2.8%) ConocoPhillips (3.7%) Home Depot (2.5%) Chevron (5.1%) Texas Instruments (3%) Abbvie (3.6%) As you can see, you get a mix of high-yield dividend stocks along with stocks that have strong growth supporting future payout increases. The result is a combined yield of about 4% based on trailing-12-month distributions from the ETF. But the forward yield should be even higher considering most constituents will pay out more over the next year than the previous year. With an expense ratio of just 0.06%, the cost of investing in this ETF is low and in line with some of the most popular index funds on the market. The Dow Jones dividend index's decision to weight constituents by market cap (with a 4% weight limit) makes it a very efficient index to track, and it lowers the risk tied to any high-yield stocks that aren't as fundamentally sound as the screener suggests. If the market bids down the value of those stocks, they will comprise a lower percentage of the index over time, while the high-quality businesses rise to the top. Consistently investing $500 per month into the Schwab U.S. Dividend Equity ETF will eventually produce a sizable portfolio. Automatically reinvesting the quarterly distribution from the ETF will ensure a good total return on your investments as you accumulate shares over time. Since its inception in 2011, the fund has produced an annualized total return of 12.2%. That's an exceptional performance, but it's also worth pointing out the S&P 500 index has beaten the ETF with an annualized total return of 14.5%. The gap between the two has widened recently due to the outperformance of growth stocks since 2023. Historically, the S&P 500 averages returns around 10% per year, and 9% is more appropriate as a conservative estimate of the ETF's annual total return. The ETF's 4% distribution yield is also relatively high, but it may come down over time as the Federal Reserve lowers interest rates. That said, there's no telling what prevailing interest rates will be well into the future. A 3.5% yield is a reasonable estimate for the ETF's future yield. With those assumptions in mind, here's how a $500 monthly investment in the Schwab U.S. Dividend Equity ETF could grow over time if you automatically reinvest dividends. Years Investing Portfolio Value Forward Dividend Payment 1 $6,245 $219 5 $37,368 $1,308 10 $94,862 $3,320 15 $183,323 $6,416 20 $319,431 $11,180 25 $528,851 $18,510 30 $851,070 $29,787 Calculations by author. There are a few important caveats to the above scenario. First of all, it's based on forecasts for expected returns and dividend yields that could be well off the mark. More importantly, those returns won't be linear over time. The market is full of ups and downs. The sequence and size of those ups and downs could have a tremendous impact on the final result of your investments. That said, the longer your holding period, the more likely your results will look like the table above. Another important consideration is the impact of inflation: $30,000 won't have the same buying power in 30 years as it has today. That means investors will have to adjust their expectations or strategy if they want future purchasing power equivalent to $30,000 today. That could mean consistently increasing the monthly contribution, for example. While your actual results may vary from the above table, the key takeaway for most investors is to get started and remain consistent. The Schwab U.S. Dividend Equity ETF is a great option if you seek dividend growth and income in retirement. Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Chevron, Cisco Systems, Home Depot, and Texas Instruments. The Motley Fool recommends Lockheed Martin and Verizon Communications. The Motley Fool has a disclosure policy. This ETF Could Turn $500 Per Month Into a $851,000 Portfolio Paying $30,000 in Annual Dividend Income was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
Better Dividend Growth ETF: Vanguard Dividend Appreciation ETF or iShares Core Dividend Growth ETF
Dividend growth stocks have delivered the best returns over the last 50 years. Vanguard Dividend Appreciation ETF and iShares Core Dividend Growth ETF both track indexes focused on dividend growth stocks. There are subtle differences between these two dividend ETFs. 10 stocks we like better than Vanguard Dividend Appreciation ETF › Dividend growth stocks can be powerful investments. Hartford Funds and Ned Davis Research dug into the data on stocks based on their dividend policy. They found that over the past 50 years, dividend growers produced a higher total return with less volatility than companies that didn't increase their dividends regularly, those that cut or eliminated their payouts, and those that didn't pay dividends. The outperformance really added up over the long term. A hypothetical $100 invested in S&P 500 dividend growth stocks in 1973 would have grown to nearly $15,874 by the end of 2024. However, a similar $100 investment made in companies that didn't increase their dividend would have only grown to $2,983, while $100 in dividend non-payers would have only been worth $899. Meanwhile, a $100 investment in dividend cutters and eliminators would have lost money and been worth only $63 at the end of this time frame. Clearly, investing in dividend growth stocks can be a very powerful strategy. However, managing a portfolio of dividend growers is easier said than done. The good news is that many exchange-traded funds (ETFs) make investing in a strategy like dividend growth stocks easy. Two top options are the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) and iShares Core Dividend Growth ETF (NYSEMKT: DGRO). Here's a closer look at which dividend ETF is better for investors who want to benefit from the power of dividend growth stocks. The Vanguard Dividend Appreciation ETF and the iShares Core Dividend Growth ETF each track an index that measures the performance of dividend growth stocks. However, there are some subtle differences that investors should consider. The Vanguard Dividend Appreciation ETF tracks the S&P U.S. Dividend Growers Index, which aims to measure the performance of U.S. companies that have consistently increased their dividend every year for the past decade. It excludes the top 25% of the highest-yielding dividend companies from the list. Currently, 338 companies are in the index. Meanwhile, the iShares Core Dividend Growth ETF tracks the Morningstar U.S. Dividend Growth Index, which provides exposure to companies with at least a five-year history of uninterrupted dividend growth and the capacity to continue increasing their dividends. The index excludes REITs and the top 10% highest-yielding stocks. Currently, 408 stocks make the cut. The funds remove the highest-yield stocks to avoid yield traps that, for example, have a high yield because of a crashing stock price. The main goal of each index, and the ETFs that track them, is to hold the companies with the highest likelihood of increasing their dividends in the future. Here's a snapshot of their top holdings: Vanguard Dividend Appreciation ETF iShares Core Dividend Growth ETF Broadcom (4.2% of the fund) Microsoft (3.5%) Microsoft (4.1%) JPMorgan Chase (3.3%) Apple (3.8%) Broadcom (3.1%) Eli Lilly (3.7%) ExxonMobil (2.7%) JPMorgan Chase (3.6%) Johnson & Johnson (2.6%) Visa (3%) Apple (2.6%) ExxonMobil (2.4%) AbbVie (2.4%) Mastercard (2.4%) Procter & Gamble (2.2%) Costco (2.3%) CME Group (2.2%) Walmart (2.2%) Home Depot (2.1%) Data sources: Vanguard and BlackRock. Because the iShares Core Dividend Growth ETF only excludes the 10% highest-yielding dividend stocks instead of the top 25%, the fund has a higher dividend yield: 2.3% trailing-12-month yield compared to 1.8% from the Vanguard ETF. One of the many benefits of investing in ETFs is that they do all the work. In exchange, you pay the fund's manager a fee, known as the expense ratio. This cost can be well worth it for the ease ETFs provide in helping you achieve your investment strategy. Vanguard is a pioneer in offering low-cost index funds to investors. It's always working to save investors money. It recently did that for investors in its Dividend Appreciation ETF by lowering the expense ratio to 0.05%. That makes it even cheaper than the iShares Core Dividend Growth ETF, which has a 0.08% expense ratio. Put another way, for every $10,000 you invest in the Vanguard Dividend Appreciation ETF, you'd pay $5 in management fees each year. That compares to $8 for a similar investment in the iShares Core Dividend Growth ETF. While it might not seem like much, a few dollars in management fees each year can really add up over the decades. While the past doesn't guarantee the future, it's important to look back at a fund's performance to see how well its strategy has done in delivering returns for investors. Here's a look at the returns produced by these funds over the past decade: Fund 1-Year 3-Year 5-Year 10-Year Vanguard Dividend Appreciation ETF 11.14% 9.55% 13.05% 11.20% iShares Core Dividend Growth ETF 8.84% 7.58% 16.36% 11.56% Data source: Vanguard and BlackRock. As that table shows, the Vanguard Dividend Appreciation ETF has delivered a stronger performance in recent years. Meanwhile, the iShares Core Dividend Growth ETF has performed better over the longer term, though its 10-year return is only slightly higher than Vanguard's. The Vanguard Dividend Appreciation ETF and the iShares Core Dividend Growth ETF focus on dividend growth stocks, which have proven to be winning long-term investments. Either fund would be a solid option for investors seeking to add these powerful wealth creators to their portfolios. The iShares ETF is better for those seeking a bit more income now (due to its higher yield), while the Vanguard fund has a lower fee structure, which enables its investors to keep more of the returns generated by the fund. Before you buy stock in Vanguard Dividend Appreciation ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard Dividend Appreciation ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $638,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $853,108!* Now, it's worth noting Stock Advisor's total average return is 978% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Matt DiLallo has positions in Apple, Broadcom, CME Group, Home Depot, JPMorgan Chase, Johnson & Johnson, Mastercard, and Visa and has the following options: short August 2025 $250 calls on Apple. The Motley Fool has positions in and recommends AbbVie, Apple, Costco Wholesale, Home Depot, JPMorgan Chase, Mastercard, Microsoft, Vanguard Dividend Appreciation ETF, Visa, and Walmart. The Motley Fool recommends Broadcom, CME Group, and Johnson & Johnson and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Better Dividend Growth ETF: Vanguard Dividend Appreciation ETF or iShares Core Dividend Growth ETF was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
2 Unstoppable Vanguard ETFs That Have Doubled in Just 5 Years
The ETFs listed here target growth stocks and have achieved impressive returns. Both offer broad diversification, holding well over 100 stocks in their portfolios. As is usual at Vanguard, both ETFs charge incredibly low fees to investors. 10 stocks we like better than Vanguard Index Funds - Vanguard Growth ETF › Investing in exchange-traded funds (ETFs) is usually associated with safe and stable long-term investing. But not all ETFs are the same. And just because you invest in one doesn't mean you can't still earn a great return. Two ETFs that have produced some fantastic returns for investors in the past five years are the Vanguard Information Technology Index Fund ETF (NYSEMKT: VGT) and the Vanguard Growth Index Fund ETF (NYSEMKT: VUG). Here's why these funds have performed so well, and why it may not be too late to invest in them today. This Vanguard ETF invests broadly within the tech sector. It has more than 300 stocks in its portfolio, giving exposure to companies involved with semiconductors, application software, electronics components, and many other areas of tech. And with tech stocks surging in value in recent years due to the excitement surrounding artificial intelligence (AI), it's perhaps not too surprising to learn that this ETF has risen by 135% in the past five years. And that rises to around 141% when you include the fund's dividend. By comparison, the S&P 500's total returns (which include dividends) are 109% over that period. While the past five years have been good ones for the market as a whole, tech stocks have done particularly well. Given the strong trends in AI and the investments that continue to flow into AI-related projects, this ETF can still be an excellent option for your portfolio. While it's by no means a pure AI investment, the stocks within this ETF can all benefit from trends related to it as tech spending as a whole is likely to increase as companies invest in next-gen technologies and upgrade their existing infrastructure. The fund also charges a modest expense ratio of 0.09%, which can be crucial in ensuring that fees aren't taking a big chunk of your returns. Most of the stocks in the ETF account for no more than 4% of its total holdings, with the exception being the big three: Apple, Microsoft, and Nvidia, which together make up nearly 46% of the fund's portfolio. But given their leading positions in tech, how these stocks go, other tech stocks are likely to follow, anyway. If you're looking for a long-term investment and don't mind the volatility that can sometimes come with tech stocks, the Vanguard Information Technology Index Fund can be an excellent ETF to buy and hold for years. For a more balanced option outside of just tech, you may want to consider the Vanguard Growth Index Fund ETF. It simply focuses on the largest growth stocks in the country. It is, however, a bit more concentrated since it has positions in 166 stocks (as of April 30). While tech stocks take up the bulk of the portfolio at more than 57% of the ETF's holdings, it also has a strong position in other sectors. Consumer discretionary stocks account for 19% of its portfolio, and industrials make up close to 10%. This ETF has also delivered market-beating returns for investors, but with less focus on tech, the gap between it and the S&P 500 hasn't been as significant as has been the case with the Vanguard Information Technology ETF. The same top three stocks that make up the bulk of the Vanguard tech fund are also the top three in this ETF. But in the Vanguard Growth ETF, Apple, Microsoft, and Nvidia combine for around 31% of its holdings. Having less exposure to these big three stocks helps explain why the fund's performance hasn't been as strong as the other Vanguard ETF listed here. However, that also means more diversification for investors and potentially less risk in the long run. The more diversified Vanguard Growth Index Fund ETF, which charges a lower expense ratio of 0.04%, can be a better option for more risk-averse growth investors who don't necessarily want to be all-in on tech. Before you buy stock in Vanguard Index Funds - Vanguard Growth ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard Index Funds - Vanguard Growth ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $638,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $853,108!* Now, it's worth noting Stock Advisor's total average return is 978% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. 2 Unstoppable Vanguard ETFs That Have Doubled in Just 5 Years was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
