The iShares Core Dividend Growth ETF (DGRO) made its debut on 06/10/2014, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.
The iShares Core Dividend Growth ETF is a rare dividend fund that prioritizes dividend growth over yield. Consistent dividend increases often signal strong cash flow, as well as management confidence in future earnings. Consistent dividend growth is much more highly correlated with high total returns than high yield is.
Holding a bunch of stocks from the same sector doesn't mean you're diversified. In fact, it could make your portfolio more vulnerable. Small positions (
I am supportive of the general idea of dividend growth investing, since it is a simple but powerful way to select high-quality stocks. DGRO offers one interpretation of a dividend growth strategy, and has provided strong results since its 2014 inception, especially in weaker periods for the broader market. Nonetheless, I am concerned that its stock selection is too simple and robotic, especially the rule which disqualifies the highest 10% yielding stocks available.
Rising interest rates and the U.S. credit downgrade have made dividend growth stocks less timely now than two months ago. After examining two leadings funds, VIG and DGRO, I still feel positive for dividend growth funds for their reasonable valuation. Among VIG and DGRO, I like VIG better for many reasons.
DGRO strikes an ideal balance between dividend growth and earnings growth, avoiding the pitfalls of high-yield, slow-growth strategies common in other dividend ETFs. The fund's low cost, broad diversification, and strong historical performance make it a best-in-class choice for income-oriented investors seeking capital appreciation. DGRO has outperformed the S&P 500 over the past decade and offers a compelling inflation-adjusted yield outlook, supporting my strong buy rating.
Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the iShares Core Dividend Growth ETF (DGRO) is a smart beta exchange traded fund launched on 06/10/2014.
iShares Core Dividend Growth ETF is a strong buy due to its exposure to sectors with the high earnings growth prospects, such as financials, technology, healthcare, and utilities. The ETF boasts a low expense ratio, strong liquidity, and a healthy dividend yield, making it an attractive long-term investment option. Despite modest risk factors, DGRO's robust earnings growth and attractive valuations position it for significant share price and dividend returns in 2025.
iShares Core Dividend Growth ETF portfolio focuses on large-cap companies with a history of consistent dividend growth. DGRO's portfolio skews towards defensive sectors with more attractive valuations. With policy and trade uncertainty casting a dark cloud on the equity markets, I believe DGRO will continue to outperform on a relative basis.
DGRO focuses on dividend growth but dismisses valuation. The average P/FCF sits at 27x, which seems too optimistic. So-called growth stocks are often overvalued; total return and valuation are crucial for sustainable high returns. High market valuations pose significant downside risks; historical examples show markets will swing from exuberance to panic over time.
Rotating from US to German and European small-cap stocks has been successful, but for US investors, DGRO is a viable alternative. DGRO is a low-cost ETF with a 5-star Morningstar rating, tracking U.S. equities with consistent dividend growth, and has a fee of just 0.08%. DGRO holds 407 companies with a P/E ratio of 21.47x and a P/B of 3.52, cheaper than SPY's averages, and offers a 2.18% yield.
Focusing on dividends or total return are two distinct strategies that offer their own set of pros and cons. Total return may be the best for maximizing the value earned with every dollar increased. Dividend investing prioritizes a consistent source of supplemental income. The best investment strategy is one that aligns with your specific goals, risk tolerance, and lifestyle. Investing doesn't have to be so black or white.