Is Vanguard Dividend Appreciation ETF (VIG) a Strong ETF Right Now?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Sep 05 2024
0mins
Should l Buy AVGO?
Source: NASDAQ.COM
Overview of Vanguard Dividend Appreciation ETF (VIG): Launched in 2006, VIG is a large-cap blend ETF managed by Vanguard with over $83.77 billion in assets, aiming to match the performance of the NASDAQ US Dividend Achievers Select Index, featuring a low expense ratio of 0.06% and a 12-month trailing dividend yield of 1.73%.
Investment Performance and Strategy: VIG has shown strong performance with a year-to-date increase of approximately 14.72% and a 20.59% rise over the last 12 months, while maintaining a diversified portfolio primarily in Information Technology, Financials, and Healthcare sectors, making it a medium-risk investment option compared to other ETFs in the same category.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 331.170
Low
370.00
Averages
457.75
High
525.00
Current: 331.170
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Outstanding Stock Performance: Broadcom's stock has surged over 600% in the past five years, reflecting strong performance in the tech sector and increased investor confidence, further solidifying its market position.
- Stable Cash Flow: The company currently boasts a free cash flow of $7.4 billion, enabling it to consistently pay a quarterly dividend of $0.65 per share while continuing to invest in growth, indicating its financial health.
- Robust Revenue Growth: In its fourth-quarter 2025 report, Broadcom's revenues grew by 28% year-over-year, with free cash flow up 36%, and even if growth slows slightly in the coming quarters, its strong balance sheet provides a true economic moat.
- Massive Backlog: Broadcom's backlog stands at an impressive $162 billion, ensuring growth potential for the next decade while showcasing its competitive advantage and execution capabilities in the market.
See More
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- AI Spending Forecast: Global spending on artificial intelligence is projected to reach $300 billion to $400 billion by 2026, reflecting hyperscalers' immense potential and investment willingness in this technology, which is likely to drive stock prices of Nvidia, Broadcom, and Taiwan Semiconductor higher.
- Total Capital Expenditure: Amazon, Alphabet, and Meta Platforms are expected to collectively invest over $500 billion in 2023 for data center construction and equipment procurement, indicating strong demand for AI infrastructure and further promoting growth in related industries.
- Surge in Chip Demand: Chips account for nearly half of the costs in data center construction, positioning Nvidia and Broadcom to directly benefit from this trend, while Taiwan Semiconductor, as a major chip manufacturer, will continue to profit, ensuring its significant market position.
- Market Valuation Rationality: Despite Nvidia, Broadcom, and Taiwan Semiconductor being projected to achieve impressive revenue growth rates of 64%, 51%, and 34% respectively, the market has not assigned them significant premiums, indicating that these stocks remain highly attractive investment options at current prices.
See More
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- Market Size Forecast: In 2023, five companies are projected to spend a staggering $700 billion on AI data centers, indicating robust growth potential in the AI infrastructure market, which is expected to reach $1.4 trillion by 2030, driving a surge in related investments.
- Nvidia's Market Dominance: With a 90% market share in graphics processing units (GPUs), Nvidia is poised to benefit significantly from the growth in AI infrastructure spending, further solidifying its leadership position thanks to its powerful CUDA software platform.
- Broadcom's Competitive Edge: As a major competitor to Nvidia, Broadcom is assisting customers in developing custom AI application-specific integrated circuits (ASICs) and is expected to achieve substantial revenue growth through its networking products and the rise of Tensor Processing Units (TPUs), meeting increasing market demand.
- Opportunities for Micron and TSMC: Micron is set to benefit from the skyrocketing demand for high-bandwidth memory (HBM), leading to sustained revenue growth, while Taiwan Semiconductor Manufacturing Company (TSMC), with its monopoly in advanced logic chip manufacturing, is expected to capitalize on AI infrastructure spending through price hikes and capacity expansion over the next four years.
See More
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- Intensifying Market Competition: Amazon's market cap stands at $2.13 trillion, but its slowing growth rate exposes it to fierce competition from TSMC and Broadcom, which have market caps of $1.57 trillion and $1.54 trillion respectively, potentially surpassing Amazon in the next three years.
- Earnings Expectations Comparison: Analysts project TSMC's earnings per share (EPS) to reach $14.31 in 2026 and $18 in 2027, while Amazon's EPS is expected to slightly decline from $7.78 last year to $7.74 this year, indicating significant investment in AI-related expenditures.
- Surge in Capital Expenditures: Amazon anticipates capital expenditures of $200 billion this year, a substantial increase from last year, which, while not directly impacting EPS, will have long-term implications for growth, particularly in the AI sector.
- Optimistic Industry Outlook: The growth of TSMC and Broadcom is primarily driven by a surge in AI spending, which is expected to propel their market caps beyond Amazon's in the coming years, making them attractive stocks for investors and intensifying market competition.
See More
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Federal Reserve Rate Cuts: The Federal Reserve has enacted a rate-cutting cycle over the past two years, with market expectations for additional cuts in 2026, impacting income investors who may turn to equities for yield.
Current Federal Funds Rate: The effective federal funds rate is currently at 3.64%, its lowest since late 2022, with potential implications for fixed income if the next Fed chair nominee, Kevin Warsh, advocates for lower interest rates.
Dividend-Focused ETFs: Investors are increasingly looking at dividend-focused exchange-traded funds (ETFs) like the JP Morgan Equity Premium Income ETF and the NEOS S&P 500 High Income ETF, which have gained popularity due to their reliable income generation.
Performance of Dividend ETFs: The SCHD and VIG ETFs have shown strong performance, with SCHD yielding 3.32% and VIG yielding 1.57%, appealing to investors seeking stable and growing cash flow amidst market volatility.
See More
Nvidia's Earnings Outlook Analysis Ahead of Report
- Market Value Surge: Since the end of 2022, Nvidia has added nearly $4.2 trillion in market cap, becoming the most valuable company on Wall Street, reflecting its dominant position and market confidence in the AI sector.
- Strong Sales Expectations: Analysts anticipate Nvidia will achieve approximately $65.6 billion in sales for fiscal Q4 2026, a 67% year-over-year increase, indicating robust demand for its AI hardware despite high investor expectations.
- Sustained Competitive Advantage: Nvidia's GPUs face virtually no competition in AI-accelerated data centers, with CEO Jensen Huang aggressively investing in R&D to maintain compute superiority, planning to introduce advanced GPUs annually.
- Pricing Power Challenges: As GPU supply improves, Nvidia's pricing power may weaken; although its GAAP gross margin remains above 70%, future sales growth could be impacted by internal competition and market dynamics.
See More
