Yahoo Finance Is iShares Core Dividend Growth ETF (DGRO) a Strong ETF Right Now?
Launched on 06/10/2014, the iShares Core Dividend Growth ETF (DGRO) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $27.20 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund seeks to match the performance of the Morningstar US Dividend Growth Index before fees and expenses.
The Morningstar US Dividend Growth Index is composed of U.S. equities with a history of consistently growing dividends.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.08%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.36%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For DGRO, it has heaviest allocation in the Financials sector --about 19.10% of the portfolio --while Information Technology and Healthcare round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 3.10% of total assets, followed by Exxon Mobil Corp (XOM) and Apple Inc (AAPL).
The top 10 holdings account for about 26.43% of total assets under management.
Performance and Risk
The ETF return is roughly 8.46% and is up about 17.49% so far this year and in the past one year (as of 06/26/2024), respectively. DGRO has traded between $47.36 and $58.55 during this last 52-week period.
DGRO has a beta of 0.89 and standard deviation of 14.55% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 423 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Core Dividend Growth ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares MSCI EAFE Growth ETF (EFG) tracks MSCI EAFE Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares MSCI EAFE Growth ETF has $14.73 billion in assets, Vanguard Dividend Appreciation ETF has $79.55 billion. EFG has an expense ratio of 0.36% and VIG charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
iShares MSCI EAFE Growth ETF (EFG): ETF Research Reports
