Ah…the dividend. The yield seekers dream. Own a stock and get paid to do it. Not bad at all.
Maybe retirees, pension funds, and passive mutual funds love investing in dividend stocks because of the yield that is generated from the dividend payment. It makes sense. Buy a stock. Get paid to hold that stock. Live off the dividend or pay pension payments off the dividend. I get it.
VOO (Vanguard Index Funds – Vanguard S&P 500 ETF) is one of the most well know index funds in the world. Managed by the multi-trillion dollar company Vanguard, VOO gives investors overall exposure to the markets that very closely mimics the S&P 500. One of the benefits of VOO is their dividend payment, and we will spend the rest of this short article discussing everything VOO dividend.
The VOO Dividend
VOO is actually a pretty big ETF as it currently has about $91,000,000,000 under management. Vanguard has done an exceptional job of gathering a crazy about of assets in order to charge them fees.
Here is how the VOO dividend works. On ex-dividend date, let’s say next week on March 22, we have 100 shares of VOO. That morning, VOO will open down $1.00 from the previous day’s close plus or minus whatever it was going to open at. Let’s say VOO closed March 21 at $220 and the next morning (March 22) it is going to open at $221. Rather than opening at $221, it will open back at $220 because the $1.00 per share is taken out in order to pay the quarterly dividend and it will be received by shareholders as a cash payment to their brokerage account over the next few days.
Here is a chart of all VOO dividend payments over the last few years. Again, it is a cash payment per share into a shareholders brokerage account a few days after the ex-dividend date.
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Fortunately, for those who are shareholders of VOO, Vanguard is very quick to give dividend payments. On ex-dividend day, the money does always get distributed to the brokerage account right away. Most stocks take more than a week for everything to clear however the VOO dividend usually arrives in less than a week.
Does the VOO Dividend Make it a Buy?
Nope! It does not. We have already spoken about how dividends are a sign of companies not feeling they have any more growth potential, but the SPY Index ETF outperforms VOO and has a higher yield percentage. While VOO is great and Vanguard advertises that it is such a low-cost alternative to the market, VOO (1.91% yield) does not outperform SPY (1.93% yielf) or pay a larger dividend.