VIG vs. DGRO: Two Dividend Growth ETFs, One Clear Difference

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VIG and DGRO are two of the most similar dividend ETFs you will find. Both screen for dividend growth. Both are low cost. Both hold several hundred U.S. stocks. And both have delivered broadly competitive long-term returns.

The difference comes down to one structural question: how strict should the dividend growth requirement be? VIG requires at least 10 consecutive years of dividend increases. DGRO requires only five. That single difference in the eligibility bar shapes the rest of each fund – how many stocks qualify, which sectors get included, what the expense ratio is, and what kind of investor each fund fits best.

This guide breaks down what each fund holds, where their real differences show up, and how to decide which one fits your portfolio – or whether either does.

What Do VIG and DGRO Actually Track?

VIG tracks the S&P U.S. Dividend Growers Index. This index requires at least 10 consecutive years of dividend increases. It also excludes the top 25% of eligible companies by current yield – a filter designed to keep the fund away from high-yield names that may be paying unsustainable dividends. The result is a portfolio of companies with long, consistent records of dividend growth but lower current yields.

DGRO tracks the Morningstar US Dividend Growth Index. This index requires at least five consecutive years of uninterrupted dividend growth, applies a payout-ratio sustainability filter, and excludes the top 10% of eligible companies by current yield. The result is a broader portfolio – roughly 400 companies versus VIG’s roughly 330 – with a slightly higher current yield and more sector diversification.

For official fund details, see the Vanguard VIG product page and the iShares DGRO product page. Yields and holdings fluctuate over time – verify current figures before investing.

The Core Difference: Strictness vs. Breadth

The 10-year versus 5-year requirement is the defining difference between these two funds. It sounds like a minor technical detail, but it has real consequences for who qualifies.

A company with seven consecutive years of dividend increases qualifies for DGRO but not VIG. A company that started paying dividends in 2016 and has increased them every year since can get into DGRO in 2021, but must wait until 2026 before VIG will consider it. Younger companies, faster-growing companies, and companies that went through a payout freeze before resuming growth are all more likely to end up in DGRO than in VIG.

That more demanding requirement is both VIG’s strength and its limitation. It produces a portfolio of companies with genuinely long, proven records of dividend growth. However, it also excludes many quality companies that simply have not been paying growing dividends for a full decade yet – not because they are poor businesses, but because they are younger or started their dividend programs more recently.

Sector Exposure: Where the Differences Show Up

Because VIG and DGRO apply different screens, their sector profiles differ – particularly around technology. DGRO typically carries a higher technology allocation than VIG, because technology companies that have been growing dividends for five or more years can enter DGRO before they qualify for VIG’s stricter 10-year bar.

Both funds can include financial companies, as long as those companies meet the relevant dividend growth criteria. Healthcare, industrials, and consumer staples tend to be significant allocations in both funds.

In practice, sector weights in both funds shift with market conditions and index reconstitutions. Rather than relying on fixed percentages, the key takeaway is that DGRO generally captures a slightly broader sector profile, while VIG is more concentrated in companies with the longest dividend track records.

Yield: DGRO Pays Slightly More

DGRO’s yield is typically in the 1.9-2.1% range. VIG’s yield is usually in the 1.5-1.7% range. The gap is modest – roughly half a percentage point – and both funds are lower-yielding than higher-income ETFs like SCHD or VYM. The yield difference is partly a result of VIG excluding the top 25% of eligible companies by yield, while DGRO excludes only the top 10%.

Neither fund is designed primarily for current income. Both are built around dividend growth – the expectation that payouts will increase over time rather than be large today. Investors seeking higher current income will generally find SCHD or VYM more suitable. For the comparison between SCHD and VIG specifically, see SCHD vs. VIG.

Expense Ratio: VIG Has a Clear Edge

VIG charges 0.04% per year. DGRO charges 0.08%. On a $10,000 investment, that is a $4 annual difference. Over long holding periods, the compounding effect of that fee gap becomes more meaningful – though both funds remain inexpensive by any broad standard.

For investors choosing between two broadly similar funds, VIG’s lower expense ratio is a meaningful structural advantage. For more on how expense ratios compound over time, see ETF Expense Ratios Explained.

Performance: Close, But Market-Dependent

Over long periods, VIG and DGRO have produced broadly similar total returns. In technology-led markets, DGRO’s typically higher technology exposure may give it a modest advantage. In markets where longer-tenured, more defensive companies lead, the dynamics can shift the other way. The difference in any given period is more likely to reflect sector rotation than a fundamental quality gap between the two funds.

Neither fund has a proven, consistent long-run performance edge over the other. Investors should not choose between them based on recent performance alone. Past results in one market environment do not reliably predict performance in future environments.

Tax Considerations

Because DGRO’s yield is slightly higher than VIG’s, it generates modestly more annual taxable dividend income in a taxable brokerage account. However, both funds produce relatively low annual income compared with SCHD or VYM, so the difference is small in practical terms.

Many dividends from U.S. equity ETFs like VIG and DGRO may qualify for the lower qualified-dividend tax rate if holding-period requirements are met, though your Form 1099-DIV is the authoritative source each year. For the full framework on ETF taxes and account placement, see ETF Taxes Explained.

Beginner Decision: VIG or DGRO?

The choice between VIG and DGRO is not about one being better than the other. It is about which approach to dividend growth fits your priorities.

For investors who want a single dividend growth ETF at the lowest cost and most rigorous historical screen, VIG’s structural advantages are meaningful. For investors who prefer slightly broader exposure and can accept the modestly higher cost, DGRO fills that role. Both are reasonable choices for a dividend growth satellite alongside a core broad-market fund.

Can You Hold Both?

Yes, though the benefit of holding both is limited. VIG and DGRO have considerable overlap in their holdings and similar sector exposures. Combining them adds modest diversification at the margin – primarily through including companies with 5-9 year dividend growth records that DGRO holds but VIG does not.

For most investors, choosing one and pairing it with a core broad-market fund is simpler and produces a cleaner portfolio. If you want to diversify your dividend sleeve across different methodologies, pairing VIG or DGRO with SCHD – which uses a yield and quality composite score – provides more meaningful differentiation than VIG plus DGRO together.

Where VIG and DGRO Fit in a Portfolio

Both funds work best as satellite positions alongside a broad-market core fund like VOO or VTI. Neither is a complete portfolio on its own – both exclude bonds, international stocks, and many sectors that a fully diversified portfolio needs. For a full framework on combining core and satellite positions, see The 3-ETF Portfolio Strategy.

The Bottom Line

VIG and DGRO are two of the most similar dividend ETFs available. The main differences are VIG’s stricter 10-year screen, lower 0.04% expense ratio, and slightly lower yield versus DGRO’s broader 400-stock portfolio, modestly higher 0.08% cost, and slightly higher yield.

For most long-term investors choosing between the two, VIG’s lower cost and longer quality screen are worth considering. However, DGRO’s broader diversification and inclusion of newer dividend growers is a real tradeoff that fits some investors better. Neither fund is definitively superior – the right choice depends on which criteria matter most to you.

For individual breakdowns of each fund, see VIG ETF Explained and DGRO ETF Explained. For how VIG compares against SCHD across yield and sector exposure, see SCHD vs. VIG. For how SCHD and DGRO differ on concentration versus diversification, see SCHD vs. DGRO. For a broader overview of the dividend ETF landscape, see Best Dividend ETFs.