Launched on 05/22/2013, the WisdomTree U.S. Quality Dividend Growth ETF (DGRW) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.
The economic environment is changing, with falling consumer spending and anemic growth rates. Dividend investors are struggling for income despite record-high markets. WisdomTree U.S. Quality Dividend Growth Fund downgraded to Sell due to minimal payouts and economic slowdown signs.
For investors seeking momentum, WisdomTree U.S. Quality Dividend Growth Fund DGRW is probably on the radar. The fund just hit a 52-week high and is up 32.3% from its 52-week low of $61.21 per share.
DGRW is an index fund tracking the WisdomTree U.S. Quality Dividend Growth Index, a dividend growth index. The portfolio closely tracks the S&P 500, removing non-dividend paying companies. We explore DGRW's problems including inconsistent dividend growth and high expenses relative to peers.
WisdomTree US Quality Dividend Growth Fund (DGRW) is able to capture higher levels of price appreciation due to its holding make up. DGRW offers exposure to the tech sector while maintaining a priority focus on dividends. Although the starting yield of 1.5% is low, DGRW does offer some dividend growth over time.
I believe the DGRW ETF's simultaneous focus on growth and dividends makes it unappealing for investors due to its mixed investment strategy and higher expense ratio. Investors would benefit from selecting distinct ETFs like SCHD, VYM, VGT, or QQQM, which offer lower expense ratios and can be better tailored to specific investment objectives. My article does not aim to recommend entering DGRW at current prices. Instead, it argues that this ETF lacks a clear use case.
With the high attention investors are devoting to mega-cap growth stocks, it's not surprising that dividends are taking a backseat. That shouldn't be the case because dividend payers perform well over the long-term and data confirm payouts increased in the second quarter – both positive signs for exchange traded funds such as the WisdomTree U.S.
You have to be careful when you look at ETFs because sometimes their names can be misleading. When you dig into the methodology backing the WisdomTree U.S. Quality Dividend Growth Fund ETF, you realize it isn't a dividend ETF at all.
The WisdomTree U.S. Quality Dividend Growth Fund ETF has generated strong total returns in recent years. However, there are several glaring weaknesses that make it unsuitable as a dividend snowball. We provide alternatives that can help investors build a much better dividend snowball.