Building Your ETF Portfolio: A Dividend ETF List Worth Exploring With $500

Why Vanguard’s ETF Options Stand Out

When constructing a long-term investment strategy, many investors overlook the power of exchange-traded funds (ETFs) in favor of chasing individual stocks. Yet the reality is that ETFs offer a compelling alternative—delivering comparable returns with significantly lower risk exposure. Vanguard has established itself as a premier provider in this space, offering several funds that deserve consideration for any serious investor.

If you’re allocating $500 or even that amount across multiple positions, understanding which dividend ETF list items align with your goals becomes crucial. The following three Vanguard products represent distinct approaches to building lasting wealth.

Understanding the Broad Market Foundation: Vanguard S&P 500 ETF (VOO)

Before diving into specialized strategies, it’s worth considering the foundation—the Vanguard S&P 500 ETF (NYSEMKT: VOO). This fund mirrors the S&P 500, giving you exposure to America’s 500 largest companies. Essentially, you’re investing in the broader U.S. economy’s performance, which has historically proven to be one of the most reliable wealth-building approaches.

VOO’s composition has evolved over time. While nine of its top 10 holdings are technology companies, the fund still maintains representation across every major U.S. sector. This diversification matters, as it ensures you’re not overexposed to any single industry downturn.

The cost structure deserves attention as well. With a 0.03% expense ratio, you’re paying only $0.15 annually for every $500 invested. This efficiency means more of your gains remain in your pocket rather than flowing to fund managers.

Growth-Focused Strategy: Vanguard Growth ETF (VUG)

For investors seeking outperformance beyond the S&P 500 benchmark, the Vanguard Growth ETF (NYSEMKT: VUG) presents an interesting case study. This fund concentrates on companies displaying above-average revenue and earnings expansion within their industries.

The fund’s composition reflects this strategy: approximately 63% technology exposure, supplemented by consumer discretionary (17.6%), industrials (7.7%), and healthcare (5.9%) positions. This concentration in growth sectors has yielded impressive historical results.

Since January 2004, VUG has returned 874% versus the S&P 500’s 490%—a substantial outperformance gap. Over the past decade, tech’s dominance in returns has widened this advantage further. While sustaining a 16% average annual return seems unrealistic, even a conservative 10% annual performance would transform a $500 one-time investment into approximately $1,000 within 7.2 years.

Income Generation: Vanguard High Dividend Yield ETF (VYM)

Income-focused investors should examine the Vanguard High Dividend Yield ETF (NYSEMKT: VYM). This represents a complementary approach to growth-oriented funds, as it typically holds companies from sectors underrepresented in aggressive growth strategies.

Inclusion criteria for VYM require companies to demonstrate high forecast dividends over the coming 12 months, excluding REITs. Current top holdings include Broadcom (8.69%), JPMorgan Chase (4.06%), ExxonMobil (2.34%), Johnson & Johnson (2.32%), and Walmart (2.24%).

The fund’s current 2.4% dividend yield stands below its decade-long 3% average—though that average was skewed by temporary pandemic-era spikes. Still, this yield doubles the S&P 500’s average, making it attractive for income seekers. A $500 investment at the current 2.4% yield generates approximately $12 annually. While modest in isolation, dividend reinvestment compounds this benefit over decades, accelerating your wealth accumulation trajectory.

Constructing Your Own Dividend ETF List

When evaluating which options to include in your personal dividend ETF list, balance remains key. VUG offers growth potential for those with time horizons measured in decades. VYM provides steady income generation and stability. VOO delivers the diversified foundation that has consistently beaten most active managers over long periods.

Whether deploying $500 in each fund or concentrating your allocation in one or two positions, these three Vanguard ETFs offer proven track records, low costs, and the potential for substantial long-term wealth building. The specific allocation depends on your risk tolerance and income needs, but all three merit serious consideration for anyone committed to buy-and-hold investing strategies.