If the recentstock market sell-off teaches anything, it is
that building a successful portfolio requires much more than
randomly pickingstocks .
In the topsy-turvy world of stocks, solid dividend-paying stocks
are among the only near certain things. In fact, the majority
ofgains in the S&P 500 during the past several decades can be
attributed todividend appreciation .
Investing in a diversified basket of stocks that have a solid
history of steady and increasing dividends is one of the primary
keys to success. If you don't have the time or inclination to
build your own dividend portfolio stock by stock, there is a
solution for you.
) are a popular tool with investors. These instruments provide
investors access to various baskets of securities, commodities
and currencies via individualticker symbols , which are traded on
In the first quarter of thisyear , ETFs had investor inflows
of more than $53 billion. In fact, four of the past fivequarters
saw more than $50 billion deployed in ETFs. Talk about a
successfulinvestment product: Combining the success of ETFs with
the proven Retirement Savings Stocks tactic of investing in
companies with steady, increasing dividends equals a powerful
One of the ETFs I'm alluding to is the
Vanguard Dividend AppreciationFund (
, which comprises 147 stocks and total assets of just under $18
billion. The stocks make up theNasdaq Achievers SelectIndex ,
which are companies with a record of increasing dividends year
after year for at least a decade. (In other words, the same type
Retirement Saving Stocks
often seen in Carla Pasternak's
TheETF is widely diversified and is most heavilyweighted
towardconsumer staples , industrials, consumer discretionary
products and energy. Its top 10 stocks comprise 40% of the
totalnet assets . These stocks are:
My favorite trait about this ETF is that the fund's index
provider actively manages the holdings to ensure that only
financially strong companies are part of the index. Remember,
this isn't a risky high-yield ETF, but rather an ETF made up of
solid dividend payers with a substantial history of dividend
VIG yields 2.11% annually with anexpense ratio of 0.13%. The
ETF's dividends have been increasing from a little more than 87
cents a share its first year in 2007 to $1.41 in 2012. This ETF
is custom-made for investors seeking long-termwealth
accumulation, not those looking for ashort-term gain .
Technically, VIG has been in a steady uptrend since
mid-November 2012. The stock has effectively used the
upward-sloping 50-day simplemoving average assupport on its move
from around $59 toresistance at $67. It has since fallen from its
high and is consolidating in the $66 range.
Risks to Consider:
The Vanguard Dividend Appreciation ETF is a powerful tool for
long-term wealth accumulation, but it isn't risk-free. Be sure to
diversify your portfolio, even with diversified ETFs. Always use
stop-loss orders and position size properly when investing.
Action to Take -->
I like the Vanguard Dividend Appreciation ETF with a stop level
directly below the 50-day simple moving average.
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