VIG’s Recent Rebalancing and Its Impact on Investors
Last week, the iShares Select Dividend ETF (VIG) underwent a rebalancing process, leading to some notable changes in its holdings. One of the most significant shifts was the addition of Eli Lilly and Company as the fifth-largest holding, with a 3.45% allocation.
VIG’s Impressive Dividend Growth Streak
VIG has been on an impressive 11-year dividend growth streak, making it an attractive option for income-focused investors. With a current yield of 1.81%, the index has seen a minor decrease of 0.04% compared to the previous yield. However, the components of VIG boast five-year historical dividend growth rates and one-year estimated earnings growth rates averaging around 10%.
VIG: A Cross Between Large-Cap Value and Large-Cap Blend
As a fund that straddles the line between large-cap value and large-cap blend, VIG can be considered somewhat expensive with a forward P/E ratio of 20.49x. This valuation might raise some eyebrows for value investors, but its growth potential and steady dividend stream make it a compelling choice for those seeking a balance between capital appreciation and income.
VIG and SPY: Complementary Holdings
It’s essential to note that VIG shares approximately 43% overlap with the S&P 500 ETF (SPY). This means that owning both funds provides diversification benefits, as they target different segments of the market. VIG’s focus on dividend growth stocks and value-oriented companies complements SPY’s broad market exposure.
The Impact of VIG’s Rebalancing on Individual Investors
For individual investors, VIG’s rebalancing could lead to several potential outcomes. First, those who already hold VIG in their portfolios might see a slight shift in their holdings due to the addition of Eli Lilly. Second, investors considering adding a dividend growth or value-oriented ETF to their portfolios may find VIG an attractive option given its impressive dividend growth streak and solid historical performance. Lastly, some investors might choose to rebalance their own portfolios to better align with VIG’s holdings, potentially leading to trades in individual stocks.
The Global Implications of VIG’s Rebalancing
At a broader level, VIG’s rebalancing could have implications for the global economy. The addition of Eli Lilly as a top holding in VIG could lead to increased investor interest in the pharmaceutical sector. Additionally, the continued focus on dividend growth and value-oriented companies within VIG’s index could signal a trend towards income-focused investing, potentially influencing the strategies of other investors and asset managers.
Conclusion
In conclusion, VIG’s recent rebalancing, which included the addition of Eli Lilly as a top holding, highlights the ETF’s continued focus on dividend growth and value-oriented companies. For individual investors, this rebalancing could lead to shifts in their portfolios or an opportunity to add a dividend growth or value-oriented ETF. At a global level, VIG’s rebalancing could signal a trend towards income-focused investing, potentially impacting the strategies of other investors and asset managers.
- VIG underwent a rebalancing process last week, adding Eli Lilly as its fifth-largest holding
- The ETF has an 11-year dividend growth streak and a current yield of 1.81%
- VIG is somewhat expensive with a forward P/E ratio of 20.49x, but offers growth potential and a steady dividend stream
- Approximately 43% of VIG’s holdings overlap with SPY, making them complementary
- Rebalancing could lead to shifts in individual investor portfolios or increased interest in the pharmaceutical sector
- The focus on dividend growth and value-oriented companies within VIG could signal a trend towards income-focused investing
