DGRO vs VIG: Which Dividend ETF Should You Add to Your Portfolio Now?

With Trump tariffs fears and an underwhelming Fed meeting taking a toll on stocks, it was a worrisome Wednesday for investors. Undoubtedly, it’s feeling more like a bear market by the day (it already is if you’re overweight in technology stocks) as the S&P 500 gives up more of the gains it enjoyed when news broke of a 90-day tariff pause.

With some chance of a recession (around 45% chance, according to Goldman Sachs) baked in, it’s not hard to imagine many investors are freezing any buying activity. Indeed, it’s not an easy time to buy stocks, especially with one of the worst tariff hikes (145% on China) seen since the start of the Great Depression.

It would be nice if the tariff battle with China were to end peacefully. But only time will tell when President Xi Jinping will sit down with Donald Trump to talk deals. Indeed, it’s discouraging to hear that no phone calls or meetings have happened as of yet.

The case for sticking with stocks despite increasing tariff terrors

Either way, if the two leaders get along and ink a deal, perhaps a catastrophic economic scenario can be avoided. And in such a situation, those who exited stocks may have a tougher time getting back in as the price of admission goes up — perhaps way up, as a wave of certainty and the weight of tariff angst is lifted off the shoulders of investors.

In this piece, we’ll look at two simple ETFs for investors looking to stay the course. Despite the overwhelming negative reaction in stocks, Trump still seems confident that markets will “boom.” Whether that means he’ll back off from all (or most) tariffs in a timely manner remains the big question. Either way, there exists a scenario where markets can still boom and pick up where they were before tariffs kicked stocks into correction territory while putting the otherwise robust U.S. economy on the ropes.

The following ETFs have been a less bumpy ride compared to the S&P 500 and could be great ways to ride out a hurricane of tariff-fuelled selling. 

iShares Core Dividend Growth ETF 

In prior pieces, I’ve praised the dividend growth strategy as a great way to stay focused on the long-term game. Despite the medium-term transitory fears and economic headwinds that may present themselves, the more durable dividend growers have what it takes to keep their dividend promises to investors.

The iShares Core Dividend Growth ETF (NYSEARCA:DGRO) is home to some of the most robust, proven dividend growers in the U.S. market. And thus far, they’ve held up a bit better than the S&P 500, now down just over 10% compared to 14% for the S&P 500. If tariff tremors worsen, I’d bet the relative outperformance of the DGRO and the S&P 500 could widen. Indeed, it’s not just about tariffs.

Technology stocks are rolling over in a violent way. If you’re looking for stability, lightening up on tech may be the way to go. Though DGRO still has a good amount of blue-chip tech exposure that can hold its own when the waters get wilder.

Vanguard Dividend Appreciation Index Fund ETF

The Vanguard Dividend Appreciation Index Fund ETF (NYSEARCA:VIG) is a comparable dividend growth ETF that also punches well above its weight class. With a slightly lower expense ratio and a preference for stocks with lengthier dividend growth histories, more quality-minded investors may be inclined to go with the VIG over the DGRO. Either way, I find investors can’t go wrong with either name as they seek a different way to navigate turbulent waters. 

Personally, I find it very tough to pick between the two dividend-growth ETFs. There’s a lot of overlap. If I were forced to pick one over the other, I’d go with the DGRO for the higher yield (2.24% vs. 1.83% for the VIG). That’s the main differentiating factor, in my view, especially since the betas are virtually identical at around 0.8.

The post DGRO vs VIG: Which Dividend ETF Should You Add to Your Portfolio Now? appeared first on 24/7 Wall St..