A Look at Vanguard S&P 500 ETF

VOO Dividend History
 Year/ Dividend Amount 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
2013  —  $0.369  $0.786  $0.914
2014  $0.779  $0.809  $0.876 $1.026 
2015  $0.984  $0.902  $0.953  $1.092
2016  $1.002  $0.953  $0.883  $1.296
2017  $0.998  $1.01  $1.176  $1.184
2018  $1.084  $1.157  $1.207  $1.289
2019  $1.455  $1.386  $1.301  $1.429
2020  $1.178  $1.433  $1.309  $1.383
2021 $1.263 $1.333 $1.308 $1.533
2022 $1.374

The Risk of Loss From Dangerous Theories

Think back to the real estate boom of the mid-2000s. A common theory was that land is a limited resource. This theory meant that supply would be limited, which would lead to increased demand and continuously rising prices.

Unfortunately, many investors were unprepared for the impending real estate crash, which led to the 2008 financial crisis in part due to loose lending practices.

Now consider a similar theory with U.S. stocks, where, at times, it might appear to be the only place to put your money. An added incentive for many investors has been that if everyone sees U.S. equities as the only place to put their money, it will continue to drive equity prices higher.

In other words, it’s essential that investors not become complacent in thinking the market can only go up. With investing in the stock market, there is a risk of market downturns and corrections, which can lead to a significant decline in an investor’s portfolio and financial loss.

Valuable Dollars

Investors looking for a low-cost, low-maintenance fund that provides them with access to U.S. equity markets might opt for the Vanguard S&P 500 ETF. However, each investor must consider the level of risk they’re willing to take when investing—called risk tolerance. Also, how long the money will be invested in the market is important to consider.

Risk Tolerance and Time Horizon

Younger investors might opt to invest all their money in the equity markets because their portfolio has many years to make up for investment losses due to market corrections. Conversely, investors who are at or near retirement might opt for low-risk stocks and securities.

Risk-averse investors might buy U.S Treasury bonds and bills. Although the yield or interest is not always attractive, Treasuries are considered risk-free assets because they’re backed by the U.S. Treasury. As a result, investors can’t lose their principal or initial investment if the bond is held until its maturity or expiration date.

Rising and Falling Prices

Some investors concerned about the possibility of deflation, which is a decline in the prices of goods in an economy, may leave their money in cash. Although it may appear counterintuitive, if deflation occurs, the cash value in dollars can increase.

Conversely, some investors might be concerned about inflation, which is the pace at which prices increase in an economy. As a result, investors might invest in the stock market, including the Vanguard S&P 500 ETF, hoping to achieve a higher return rate than inflation.

Other investors might invest in securities that adjust for rising prices in the economy. For example, Treasury inflation-protected securities (TIPS) are designed to adjust in price as inflation increases, protecting investors so they never receive less than the original amount invested.

What Is the Vanguard S&P 500 ETF?

The Vanguard S&P 500 ETF (VOO) is a fund that invests in the stocks of some of the largest companies in the United States. It tracks and mirrors the performance of the S&P 500 index.

How Many Stocks Are Present in the Vanguard S&P 500 Index ETF?

The Vanguard S&P 500 Index ETF had 506 stocks in its portfolio as of March 31, 2022.

Does the Vanguard S&P 500 Index Fund Pay Dividends?

Yes, the Vanguard S&P 500 pays quarterly dividends, and as of March 31, 2022, yielding 1.31%.

Can I Buy Fractional Shares of the Vanguard S&P 500 ETF?

Vanguard does offer the ability to purchase fractional shares for VOO on its platform. But you can purchase fractional shares of the ETF on other investing platforms, such as TD Ameritrade and Robinhood.

Will the Vanguard S&P 500 (VOO) ETF Split?

The Vanguard S&P 500 (VOO) ETF has undergone a split just once in its lifetime. It occurred on Oct. 24, 2013, when its share price was falling. The company conducted a 1-for-2 reverse split, meaning it combined every two shares held by its investors into a single one. The reverse split reduced the number of shares in circulation and doubled the ETF’s price. It also reduced the spread of the difference between the buying and selling price of shares for investors.

The Bottom Line

Investing in the Vanguard S&P 500 ETF is a passive investment strategy in which the fund tracks the performance of the S&P 500. In other words, the fund’s management team is not actively trading by buying and selling stocks, which helps maintain the lower expense ratio.

Investing in Vanguard’s VOO is a low-stress way for investors to access the U.S. equity market. However, there is the risk of loss as with any investment, and investors should consult a financial professional before investing in the Vanguard S&P 500 ETF.

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