We recently compiled a list of the 8 Best Vanguard Funds to Invest In for Retirees.In this article, we are going to take a look at where Vanguard Dividend Growth Fund (NASDAQ:VDIGX) stands against the other Vanguard funds.
Every year, a significant number of Baby Boomers retire, and millennials are increasingly interested in planning their own retirement, considering the majority of people rely on their jobs as their primary source of income. Unless they have a large inheritance, it is critical to start retirement planning early and carefully, especially in a world rife with income inequity. In a 2024 study evaluating the match formulas of over 1300 employer-sponsored retirement plans, Vanguard discovered that employer contributions around 401(k)s are highly concentrated, with 44% of dollars going to the top 20% of earners. On the other hand, when it comes to retirement planning, Americans are increasingly selecting professionally managed accounts and services. To that purpose, Vanguard offers a variety of target-date retirement funds, some of which appear on our list. These funds have slowly gained traction over the years.
Numerous surveys show that Americans are inadequately prepared for retirement. A poll from the American Savings Education Council, which surveyed more than 2,000 American adults in early 2024, revealed that those aged 45-54 feel the least prepared to retire. Although 76% of Americans feel that saving for retirement is essential, just 39% of respondents had a plan in place to allow them to retire when they want. Furthermore, inflation remains a major issue for retirees, according to an Employee Benefits Research Institute (EBRI) survey, with 31% of workers and 40% of retirees citing it as a primary cause for their lack of trust in retirement funds. Alarmingly, an increasing number of Americans are continuing to work after the age of 65, which was traditionally considered retirement age. This tendency should be more visible than ever in 2025, when more Americans are predicted to reach 65 than in any previous year, according to research by the Alliance for Lifetime Income called the “Peak 65 zone.”
On a brighter note, over 80% of employees believe the SECURE 2.0 Act of 2022’s provision for employer-sponsored emergency savings accounts is seen as beneficial. Recent advice from the Department of Labor and the IRS has also clarified how plan sponsors can incorporate these emergency savings accounts into their offers. Moreover, the retirement industry has invested heavily in programs to address the retirement savings gap and inadequate preparedness of many Americans. These include automatic enrollment, matching contributions, financial literacy education, and institutional programs like multiple employer plans (MEPs). Legislative policies, like the aforementioned SECURE 2.0 Act, are also involved in making retirement more accessible for long-term workers.
In addition, a large element of retirement relates to the assisted living community sector, commonly known as old-age homes. These facilities provide seniors with companionship and care in their final years. According to a report by Grand View Research, the assisted living market was valued at roughly $91.8 billion in 2022 and is expected to rise at a compound annual rate (CAGR) of 5.53% from 2023 to 2030. In that vein, the number of seniors aged 65 and over is predicted to grow from 52 million in 2018 to 95 million by 2060.
For this list, we looked at Vanguard’s retirement-oriented funds and compiled a list of eight funds that retirement specialists and market watchers perceive as safe and popular. Furthermore, we have highlighted the top holdings of these ETFs, when appropriate. These Vanguard ETFs have grown significantly over the last five years, and the list is arranged in increasing order according to their five-year performance as of February 18, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A portfolio manager using fundamental analysis to develop strategies for the company’s municipal bond investments.
5-Year Share Price Performance as of February 18: 16.45%
Formed in 1992, the Vanguard Dividend Growth Fund (NASDAQ:VDIGX) focuses on high-quality companies with the potential and commitment to generate dividends over time. The fund focuses on a narrow portfolio of mostly mega-cap stocks with strong balance sheets. While all of the stocks in the fund have increased their dividends in recent years, several have a lengthy history of dividend increases. In that regard, the VDIGX fund is ideal for investors with a well-balanced, long-term or retirement-focused portfolio looking for dividend-paying names.
The Coca-Cola Company (NYSE:KO), a global beverage industry giant best known for its iconic brand Coca-Cola, is one of the top names in the Vanguard Dividend Growth Fund (NASDAQ:VDIGX) fund. The company’s management claimed a 62-year streak of successive rises in last year’s announcement of payment increases, making it an undeniable leader as a dividend stock.
On February 11, Citi analyst Filippo Falorni reaffirmed his Buy rating and $85 price target for The Coca-Cola Company (NYSE:KO). Falorni’s decision comes after the company’s Q4 2024 performance and predicted profitability in 2025. Since pricing was 9% higher than the projected 5.9%, the company’s organic sales growth came in 14% higher than the consensus estimate of 7%.
Overall VDIGX ranks 8th on our list of the best Vanguard funds to invest in for retirees. While we acknowledge the potential of VDIGX as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VDIGX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
