The answer should normally be “both.” It is less than prudent to buy an ETF solely for the dividend yield. It is equally misguided to assume that the dividend will grow every year, whether you are investing in individual stocks or ETFs. If you look at both dividends and growth you are likely to have better results over a longer time frame. For example, ETF VV (Vanguard Large Cap Index Fund) has had some years of negative dividend growth.

If you bought more shares in 2008 and 2009 you should be pleased. Don’t jump in and out of the market.

I compared VV with Vanguard fund VOO (Vanguard S&P 500 ETF) and found very few meaningful differences. VV has been in place six years longer than VOO, but both have similar track records. I often tell beginning investors to pick a good, low-cost S&P 500 fund because you will get the benefits of the dividends and the growth of the largest US companies.

Links to VV information: