DGRO Surpasses VIG with 252% Return — Looser Rules Give Edge
By John Nada·Jul 4, 2026·3 min read
DGRO's looser dividend rules deliver 252% return, outpacing VIG's 243%. Early inclusion of Apple and Broadcom gives DGRO the edge.
DGRO and VIG, two dividend-growth ETFs, may look similar on the surface but are worlds apart in strategy and performance. According to Yahoo Finance, over the past decade, DGRO has outpaced VIG, delivering a 252% return compared to VIG's 243%. The secret? Looser dividend eligibility rules that allow DGRO to admit high-growth companies like Apple and Broadcom sooner than VIG's stringent 10-year requirement.
This performance differentiation is not merely a statistical anomaly but a reflection of the underlying strategies dictated by each ETF's index rules. DGRO's approach includes a five-year dividend growth criterion, a positive-earnings screen, and the exclusion of the highest-yielding decile. This allows it to invest in companies like Apple and Broadcom earlier in their dividend growth phase, which can lead to more rapid compounding. In contrast, VIG's requirement for a ten-year dividend increase streak systematically excludes such high-potential entrants.
The implications of these strategies extend beyond mere numbers. DGRO's flexibility permits it to capitalize on the early stages of dividend growth, a period often marked by faster capital appreciation. This approach contrasts with VIG's more conservative strategy, which focuses on mature, cash-generative franchises like Microsoft and Exxon Mobil. While this ensures stability and lower risk, it potentially limits higher growth opportunities.
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DGRO's strategy, with its willingness to include companies like Broadcom and Apple earlier, showcases a calculated risk approach. Such companies are pivotal in DGRO's top holdings, which also include JPMorgan and Exxon Mobil, ensuring a balance between growth and stability. This nuanced approach suggests that flexibility in dividend history requirements can be a significant factor in enhancing capital growth for income-focused investors.
On the other hand, VIG's strategy is built around avoiding distressed payers by filtering out the top 25% of yielders. This method acts as a quality filter, ensuring that the portfolio remains biased towards firms with durable earnings quality. VIG's focus on dividend discipline serves as a proxy for assessing the reliability and sustainability of earnings, which is crucial for investors prioritizing steady income.
Both DGRO and VIG distribute quarterly and charge single-digit basis points, making them accessible options for investors. However, the difference in their index rules and the subsequent impact on their performance underscores the importance of understanding the fine print. For investors, the choice between DGRO and VIG ultimately depends on their risk tolerance and growth expectations.
DGRO's approach might offer a smarter way to compound income faster, especially for those willing to embrace some level of risk in exchange for potentially higher returns. The divergence in their strategies illustrates the diverse opportunities available within the realm of dividend-growth investing.