Microsoft’s AI Spending Won’t Derail Dividend Safety Inside Vanguard’s VIG

The Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) owns lone companies with astatine slightest 10 consecutive years of dividend growth, screens retired the highest yielders, and lets compounding work. VIG has returned 22% implicit the past twelvemonth and 244% implicit the past decade, a way grounds that owes arsenic overmuch to its tech-heavy roster arsenic to accepted aristocrats. This reappraisal examines whether the income motor wrong VIG is built to support paying.

How VIG pays you

VIG tracks the S&P U.S. Dividend Growers Index, which excludes the apical quartile of yielders. By design, the money skips Altria-style payouts and leans toward companies whose dividends are inactive climbing disconnected a debased base. Income flows from astir 300 underlying stocks, truthful VIG's organisation is lone arsenic harmless arsenic the payout policies of its largest holdings.

The expert who called NVIDIA successful 2010 conscionable named his apical 10 stocks and Vanguard Dividend Appreciation ETF wasn't 1 of them. Get them present FREE.

The tech engines: Broadcom, Apple, Microsoft

Broadcom (NASDAQ:AVGO) generated $8.01 cardinal of escaped currency travel successful Q1 FY26, up 33%, portion paying a $0.65 quarterly dividend. AI semiconductor gross grew 106% twelvemonth implicit year, and the dividend consumes a tiny fraction of currency generation.

Apple raised its quarterly payout astir 4% to $0.27 successful May, extending an unbroken yearly cadence since 2012. Trailing EPS of $8.26 against an yearly payout of $1.04 means Apple returns astir an eighth of net arsenic dividends. The debased payout ratio is wherefore the dividend itself is unassailable.

Microsoft faces an absorbing information case. Quarterly CapEx deed $30.88 billion, up 84%, arsenic Satya Nadella floods wealth into AI infrastructure. Operating currency travel was $46.68 cardinal successful the quarter, and Microsoft inactive raised its dividend from $0.83 to $0.91. With a payout ratio adjacent 22% of TTM EPS of $16.81, AI spending does not endanger the dividend.

The antiaircraft anchors: J&J and Visa

Johnson & Johnson raised its payout to $1.34, extending its dividend-growth streak to 64 consecutive years. Q1 nett income fell connected $330 cardinal successful litigation charges and the Intra-Cellular deal, and STELARA income dropped 60%. Management raised full-year guidance to adjusted EPS of $11.45 to $11.65, easy covering the payout. J&J holds 1 of 2 AAA firm recognition ratings successful the country.