Intro
I’m a UNC freshman putting together my first real portfolio. Until recently, my main holdings were the QQQ for growth and a small Tesla position as well as a small amount of crypto. Recently, though, I’ve added dividend ETFs like VYM and DGRO. Students always ask if dividend ETFs are “boring” compared to technology stocks—but for long-term investors, they are a very savvy choice.
Context
As a student investor, my income is low. Much of my investment funds are comprised of my savings and small sideline income. That means my funds need to expand, but they also need to be stable. It can become stressful just basing my portfolio on growth stocks and cryptocurrencies, especially if I check it on a daily basis. Steady cash flow and long-term compounding are provided by dividend ETFs, smoothing out the volatility.
Why VYM and DGRO?
VYM (Vanguard High Dividend Yield ETF): Favors stable businesses generating high dividends. It provides me with steadier cash flow and lower risk.
DGRO (iShares Dividend Growth ETF): Invests in those companies which not only pay dividends but go on to add them in the future. That means growth and rising income in the future. Together, they provide a balance: VYM for high current yield, DGRO for future dividend growth.
Why It Matters for Students
Time is my biggest ally as a college student. Small, consistent contributions pay enormous dividends over a span of many years. Beginning your dividend ETFs today places in motion a system where money works for me in college, in the military, and onwards. Whilst my Tesla and my appreciation in my QQQ offer growth exposure, my VYM and my DGRO offer me peace of mind.
Risks and Next Steps
Of course, no dividend ETF is perfect. They hardly appreciably outperform QQQ or Tesla in bull markets. That’s fine with me—I don’t need fast money, but steady and slow appreciation. From here on out, in the future, I’ll continue to purchase both VYM and DGRO whenever I accumulate more savings, but hold on to my growth assets such as QQQ and crypto.
Conclusion
Investing as a student isn’t about seeking out the highest returns the quickest. It’s ensuring you develop habits, learn balance, and allowing compounding to do the heavy lifting. For me, investing in VYM and DGRO was taking a stride towards stability and long-term growth. Even though the figures are low for the time being, I believe this groundwork will pay dividends years from now.