VIG, Better Than Individual Stocks

[Dividend Watcher]

Yes to both questions, IMO. If someone doesn't have the time or inclination to plan, analyze, purchase and monitor individual companies, then VIG, or one of the other "dividend" focussed mutual funds, may be a decent alternative investment. For me, I'd still prefer holding individual companies.

I have a couple problems with mutual funds:

1. You cannot choose which companies they hold. If you're later in the accumulation phase, you may want to transition to a greater percentage of higher yielding securities for your holdings, you may not want to be invested in certain sectors or, when you are younger, you may want to emphasize faster growing dividend growth stocks. No two investors sentiments are the same.
   
2. Mutual funds have to take into account purchases and redemptions so they have to keep a certain portion of their investment liquid to meet redemption demands. During a downturn, panicking investors can force the fund to liquidate holdings to meet those demands penalizing the rest of the investors.
   

I wouldn't have a problem if I was just beginning to focus on dividend growth investing but, for me, I'd much prefer to pick what I want to hold and determine what I'm going to do with the dividends as they roll in (reinvest or accumulate and purchase something else) on my own.