All investors like to see their investments, and their returns, grow year-on-year. And it's no different for those invested in exchange-traded funds (ETFs) like the Vanguard MSCI Index International Shares ETF (ASX: VGS), which pays out quarterly dividends.
The ETF tracks the MSCI World ex-Australia Index with net dividends reinvested. That sees it granting investors exposure to many of the world's largest companies outside of Australia.
The ETF is currently trading on a trailing dividend yield of around 1.9%, having brought in approximately $1.73 per unit in financial year 2022.
But is the ETF growing its distributions? Let's break the data down to find out.
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Disappointing few years for income investors
As global markets struggle through 2022, so has the Vanguard MSCI Index ETF. It has tumbled 16.6% year to date. Though, that's a better performance than many of its major holdings.
The fund's biggest holding is Apple Inc (NASDAQ: AAPL). The tech giant's stock has dumped 17.7% so far this year.
Its second biggest investment, Microsoft Corporation (NASDAQ: MSFT), has plunged 28% year to date, while its third largest holding, Amazon.com Inc (NASDAQ: AMZN), has slumped 30.8%.
Combined, the struggling stocks make up around 10% of the ETF's $4.7 billion of managed assets.
It may come as no surprise then, that the Vanguard MSCI Index ETF's dividends have also fallen recently.
The ETF declared a total of $1.73 of dividends in financial year 2022. That was down 8% on financial year 2021's $1.88 of declared distributions.
Let's look at how the fund's payouts have evolved over its eight-year history:
As can be seen, the fund's first full financial year following its inception in November 2014 saw it post record distributions of approximately $2.29 per unit.
And while it's been a wild ride since, it's not fair to say the ETF's dividends have grown.
What has grown over the years, though, is its value. Vanguard MSCI Index ETF's price has rocketed 77.5% over its lifetime, including its 2022 slump – certainly nothing to scoff at.
What's next for the Vanguard MSCI Index ETF?
Only time will tell where the Vanguard MSCI Index ETF, and its dividends, go from here.
The fund simply tracks a portfolio of 1,470 stocks, 71% of which are listed in the US, which all determine their own dividend offerings.
However, we do know Vanguard expects the fund to pay a dividend worth around 34.3 cents per unit next month.
