This article analyzes the performance of two prominent dividend-focused exchange-traded funds (ETFs): the Vanguard Dividend Appreciation ETF (VIG) and the First Trust Rising Dividend Achievers ETF (RDVY). It highlights RDVY's superior long-term returns compared to VIG, particularly over a ten-year period, where RDVY outpaced VIG by over 50 percentage points. While RDVY maintains its lead over a five-year horizon, the performance gap has narrowed considerably in more recent periods, with VIG even showing stronger returns in the most recent month. The article delves into the differing stock selection methodologies of both funds, with VIG tracking the S&P U.S. Dividend Growers Index and RDVY employing additional financial strength criteria. It also offers strategic advice for investors, considering tax implications for switching funds and suggesting approaches for those with existing VIG holdings in taxable accounts.
First Trust Rising Dividend Achievers ETF Shows Stronger Long-Term Growth Against Vanguard Counterpart
In the dynamic world of exchange-traded funds, investors often seek options that consistently deliver growth and reliable income through dividends. A recent analysis, published on November 9, 2026, has brought to light the notable outperformance of the First Trust Rising Dividend Achievers ETF (NASDAQ: RDVY) when compared to the widely recognized Vanguard Dividend Appreciation ETF (NYSEARCA: VIG). This comparison, initiated on November 4, 2016, reveals that over a ten-year span, RDVY generated an impressive total return of 315.51%, significantly surpassing VIG's 263.42%, assuming all distributions were reinvested.
This performance gap, amounting to 52.09 percentage points, underscores RDVY's effectiveness in achieving its objective of investing in companies with a track record of increasing dividends. The scrutiny was extended to a five-year window, beginning November 5, 2021, where RDVY continued to lead with a 65.38% return against VIG's 60.46%, a difference of 4.92 percentage points. While the lead persists, its reduction suggests that VIG has demonstrated a stronger recovery or growth trajectory in the latter half of the decade.
However, the narrative shifts when examining more recent performance. Over the past year, starting November 4, 2025, RDVY returned 17.6% versus VIG's 15.49%, a modest lead of 2.11 percentage points. Year-to-date figures also show a tight race, with RDVY up 13.06% against VIG's 12.73%. Interestingly, the most recent month presented a reversal, with VIG gaining 3.65% while RDVY experienced a 1.91% decline, giving VIG a substantial 5.56 percentage point advantage during that short period.
The divergence in results stems from their distinct methodologies. VIG, formally known as the Vanguard Dividend Appreciation Index Fund ETF Shares, tracks the S&P U.S. Dividend Growers Index, holding companies of varying market capitalizations. In contrast, RDVY aims to match the Nasdaq US Rising Dividend Achievers Index, selecting companies not only based on their dividend growth history but also on their financial health, including earnings growth, cash flow relative to debt, and payout ratios.
For investors contemplating a shift, tax implications are crucial. In tax-advantaged accounts like IRAs or 401(k)s, reallocating from VIG to RDVY incurs no immediate tax burden. However, in taxable brokerage accounts, selling VIG shares that have appreciated would trigger capital gains taxes, which could offset any potential outperformance by RDVY. A common strategy for taxable investors is to retain existing VIG holdings while directing new investments and dividend reinvestments into RDVY, thereby gradually rebalancing their portfolio without triggering immediate taxable events.
Investor Perspectives: Navigating Dividend Growth ETFs
From an investor's standpoint, the detailed performance comparison between VIG and RDVY offers valuable insights for strategic portfolio construction. For those with a long-term investment horizon, particularly ten years or more, RDVY's consistent outperformance across various timeframes, especially in tax-advantaged accounts, makes a compelling case for its inclusion. Its more rigorous selection criteria, which blend dividend growth with financial strength, appear to have yielded superior long-term returns. However, for investors with a shorter outlook of one to two years, the recent narrowing of RDVY's lead and VIG's strong showing in the past month suggest that short-term market fluctuations can significantly impact relative performance. Moreover, for individuals holding VIG in taxable accounts with substantial embedded gains, a direct switch might not be the most tax-efficient decision. A measured approach, such as allocating new capital to RDVY while retaining existing VIG positions, allows investors to capitalize on RDVY's potential long-term edge without incurring immediate tax liabilities. This nuanced understanding of both performance metrics and tax implications empowers investors to make informed decisions tailored to their individual financial goals and circumstances.
