5 Vanguard ETFs for Retirement Income & Growth

With significant market uncertainty stemming from government shutdown concerns, jobs numbers, and inflationary risks, exchange-traded funds (ETFs) have emerged as particularly attractive investment vehicles. Not only do ETFs offer substantial diversification benefits, but they also help lower overall risk compared to investing in individual securities. This risk mitigation becomes especially valuable during periods of economic volatility, making Vanguard’s suite of ETFs particularly appealing for investors seeking stability alongside yield.

The current market environment, as highlighted by analysts at Deloitte in their 2025 Commercial Real Estate Outlook, shows signs of recovery in certain sectors, presenting what some are calling generational opportunities. This backdrop makes the timing particularly opportune for considering ETFs that combine safety with income generation. The five Vanguard ETFs discussed here all feature low expense ratios ranging from 0.05% to 0.13%, providing cost-efficient exposure to various market segments while delivering consistent dividend payments.

The Vanguard Real Estate ETF (VNQ) presents a compelling opportunity with its 0.13% expense ratio and approximately 3.7% yield. The fund’s 154 holdings include significant real estate investment trust (REIT) exposure, with top positions in Welltower, Prologis, American Tower Corp., Equinix, Digital Realty Trust, and Simon Property Group. The commercial real estate market is showing signs of recovery in 2025, according to Deloitte’s analysis, suggesting potential for continued growth.

VNQ has demonstrated strong performance since bottoming at around $76 in April, climbing to $90.18 with recent dividend payments of just over 87 cents on September 26 and approximately 86 cents on June 30. The fund’s recovery trajectory suggests potential for further gains, with analysts targeting an initial rally to $95. This combination of yield, recovery potential, and sector-specific opportunity makes VNQ particularly attractive for investors seeking real estate exposure without individual property risk.

The Vanguard Dividend Appreciation Index Fund ETF (VIG) offers investors exposure to companies with proven dividend growth histories. With an exceptionally low 0.05% expense ratio and 1.59% yield, VIG tracks the S&P U.S. Dividend Growers Index across 337 holdings. The fund maintains significant technology exposure at 26% of its portfolio, with major positions in Broadcom, Microsoft, JPMorgan Chase, Apple, and Eli Lilly, complemented by 22.6% in financials and 15% in healthcare.

VIG has shown impressive recovery since its April low of approximately $170, reaching $217.27 with recent dividend payments of just over 86 cents on October 1 and about 87 cents on July 2. The fund’s sector diversification and focus on dividend-growing companies provide both income stability and growth potential, with analysts projecting an initial rally to $230. This makes VIG suitable for investors seeking companies with sustainable dividend policies and growth characteristics.

For higher immediate income, the Vanguard High Dividend Yield ETF (VYM) delivers a 2.45% yield with a minimal 0.06% expense ratio. Tracking the FTSE High Dividend Yield Index across 579 holdings, VYM includes positions in Broadcom, JPMorgan Chase, Exxon Mobil, Johnson & Johnson, and Walmart. The fund’s sector allocation emphasizes financials (21.7%) and industrials (13.2%), providing balanced exposure to dividend-paying companies across market sectors.

The International Dividend Appreciation ETF (VIGI) offers crucial global diversification with its 0.10% expense ratio and approximately 1.85% yield. Tracking the S&P Global Ex-U.S. Growers Index across 338 holdings, VIGI provides exposure to international dividend growers including Royal Bank of Canada, Novartis, SAP SE, Nestlé, Roche Holding, and Sony Group. The fund’s geographic allocation is heavily weighted toward Europe (42%) and the Pacific region (32.77%), offering balanced international exposure.

VIGI has recovered from its April low of around $74 to reach $90.73, with recent dividend payments of just over 36 cents on September 23 and approximately 54 cents on June 24. Despite current pullbacks from lofty valuations, analysts project long-term potential for the ETF to rally to $100, making it an attractive option for investors seeking international dividend growth alongside geographic diversification.

For concentrated exposure to market leaders, the Vanguard Mega Cap ETF (MGC) provides access to the largest U.S. companies with a 0.07% expense ratio and yield just under 1%. Tracking the CRSP U.S. Mega Cap Index across 185 holdings, MGC maintains heavy technology concentration at 45% of its portfolio, including positions in Nvidia, Microsoft, Apple, Amazon.com, Broadcom, Alphabet, and Tesla, complemented by consumer discretionary (14%) and financials (10.7%).

These five Vanguard ETFs collectively offer retirement investors a comprehensive strategy for balancing income generation with growth potential. Each fund has demonstrated significant recovery since April 2024 lows, with gains ranging from 20-40% while maintaining regular dividend distributions. The combination of low expense ratios, diversified holdings, and sector-specific opportunities provides multiple avenues for portfolio enhancement.

The funds’ complementary characteristics allow investors to build layered exposure across real estate, domestic dividend growers, international markets, and mega-cap technology. This approach helps mitigate concentration risk while capturing income from multiple sources. With consistent dividend payments throughout 2024 and strong price appreciation since spring lows, these ETFs represent compelling options for retirement portfolios seeking to boost income without sacrificing growth potential in uncertain market conditions.