History shows that investing $375 per month in the Vanguard S&P 500 ETF can build a $798,600 portfolio that pays $13,500 in annual dividend income over 30 years.
Over the past two decades, the S&P 500 has outperformed most other asset class benchmarks and has never produced negative returns in any 15-year period.
The S&P 500’s total return over the past 30 years has been 1,860%, and the average dividend yield over the past 10 years has been 1.7%.
10 stocks we like better than the Vanguard S&P 500 ETF ›
As of September 2025, the median annual income for full-time workers ages 25 to 34 is approximately $60,000. Even in the worst-case scenario, after federal and state income taxes, the figure is about $45,500. Financial advisors recommend saving 20% of after-tax income for retirement, which means the median worker in this age group could save $9,100 per year ($758 per month).
However, given enough time, even half this amount can grow into a sizable portfolio. History shows investing $375 per month Vanguard S&P 500 ETF(NYSE: VOO) That could grow to $798,600 over thirty years, which would generate $13,500 in annual dividend income. Read on to learn more.
Image source: Getty Images.
Vanguard S&P 500 ETF Tracking S&P 500 Index(SNPINDEX:^GSPC)the index consists of 500 U.S. large-cap stocks, covering approximately 80% of domestic stocks and 40% of global stocks by market capitalization.
In this sense, the Vanguard S&P 500 ETF is a ready-made portfolio that provides diversified exposure to many of the world’s most influential companies. The top five positions are arranged by weight as follows:
NVIDIA: 7.3%
apple: 7%
Microsoft: 6.2%
letter: 5.7%
Amazon: 3.8%
The Vanguard S&P 500 ETF has an expense ratio of 0.03%, which means shareholders only pay $3 per year for a $10,000 investment in the fund. That’s well below the 0.34% average expense ratio for U.S. index funds and mutual funds. Beyond that, the investment thesis for the Vanguard S&P 500 ETF can be summarized in three points:
Over the past 20 years, the S&P 500 has outperformed benchmarks in most other asset classes, including international equities, fixed income, real estate and precious metals.
Less than 12% of large-cap funds have beaten the S&P 500 over the past 15 years, meaning even professional fund managers have struggled to beat the index over the long term.
The S&P 500 has never produced a negative return during any 15-year period since 1950, meaning patient investors are virtually guaranteed gains.
The bottom line: There aren’t many diversified index funds with a track record that rival the Vanguard S&P 500 ETF, and even fewer with lower expense ratios.
Although the S&P 500 has endured four bear markets and three recessions, its total return over the past three decades has been 1,860%, which equates to 10.4% per year. Therefore, investors can reasonably believe that the S&P 500 will produce similar returns long into the future.
At this rate, $375 per month invested in the Vanguard S&P 500 ETF would be worth $798,600 in 30 years. At that point, you can stop reinvesting the dividends. Over the past decade, the S&P 500’s average dividend yield has been 1.7%, which means a $798,600 portfolio would generate approximately $13,500 in annual dividend income.
Importantly, without reinvesting dividends, the principal will continue to grow (assuming the stock market continues to move higher). For example, over the past three decades, the S&P 500, excluding dividends, has returned 8.4% annually. At this rate, the $798,600 portfolio would be worth $1.3 million over the next five years, which would pay $22,100 in annual dividend income.
Before buying shares of the Vanguard S&P 500 ETF, consider the following factors:
this Motley Fool Stock Advisor The analytics team has just identified what they believe is 10 Best Stocks Investors can buy now… and the Vanguard S&P 500 ETF isn’t one of them. The 10 stocks selected could generate huge returns in the coming years.
consider when Netflix This list was created on December 17, 2004… If you invested $1,000 when we recommended, You will have $509,470!* or when NVIDIA This list was created on April 15, 2005… If you invested $1,000 when we recommended, You will have $1,167,988!*
Now, it’s worth noting stock advisor The overall average return is 991% — outperformed the market compared to the S&P 500’s 196%. Don’t miss the latest top 10 list, available via stock advisorand join an investment community built by individual investors for individual investors.
See 10 stocks »
*As of December 22, 2025 Stock Advisor returns
Trevor Jennewine holds positions in Amazon, Nvidia and the Vanguard S&P 500 ETF. The Motley Fool holds and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia and the Vanguard S&P 500 ETF. The Motley Fool recommends the following options: Long January 2026 Microsoft calls at $395 and short January 2026 Microsoft calls at $405. The Motley Fool has a disclosure policy.
1 Vanguard Index Fund Can Turn $375 Monthly into a $798,600 Portfolio with $13,500 Annual Dividend Income Originally Posted by Motley Fool
