Income Investing

[hendi_alex]

Just ran 'total return' comparison chart to see how 'dividend appreciation' type of ETF (VIG) compared to REIT (VNQ) and to the more growth oriented fund (IWF). Had to trim the date range as VIG was only issued in 2006. At least for this span, DG wasn't all it was cracked up to be as opposed to IWF which is sold as growth, but also include a lot of dividend growth in its results. My guess is that the out performance comes because smaller cap growth are going to be able to grow earning better than the big cap DG stocks and they will be able to growth dividends at a healthy clip as well. They probably represent better opportunity than the large cap DG stocks yet are only modest more volatile. It appears to me, that relying too much on a single theme can seriously affect overall performance. For me, big cap DG types of stocks will never represent more than about 20%-30% of the portfolio value. It would make sense that potential for all aspects of growth, including dividend growth, lies in the smaller, less mature companies, and that is where I want the lion's share of my investment dollars.