How You Can Own These Top Dividend Growth Stocks

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Investors really like dividend stocks, but with hundreds of different stocks to choose from, building a diversified portfolio of individual stocks can seem overwhelming. That's why many investors turn to ETFs for dividend investing.

In the following video, Dan Caplinger, the Fool's director of investment planning, looks at the Vanguard Dividend Appreciation ETF . Dan notes that the fund is popular with investors, having attracted about $20 billion in assets under management. With almost 150 different stocks inside the ETF, investors get broad-based dividend exposure at a very low cost. Dan points out that the Vanguard ETF doesn't have the highest yield in the dividend ETF universe, but it does have strong stocks with long track records of raising their payouts consistently. He identifies consumer goods stocks as a fertile source of stocks for the ETF, with Procter & Gamble and PepsiCo featuring yields around 3% and more than 40 years of dividend increases annually. You'll also find energy stocks among the ETF's picks, including Chevron and ExxonMobil , both of which qualify as prestigious Dividend Aristocrats.

Don't get tricked by dividend stocks
As valuable as dividend stocks are, many investors still misunderstand the important elements of how they can help your portfolio. To get past common mistakes and be smarter about dividends, read The Motley Fool's new free report "5 Dividend Myths... Busted!" In it, you'll learn which stocks provide premium growth and whether bigger dividends are better. Click here to keep reading.

The article How You Can Own These Top Dividend Growth Stocks originally appeared on

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Chevron and Procter & Gamble. It recommends and owns shares of PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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