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.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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
Managed by Blackrock, DGRO has amassed assets over $30.29 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, DGRO seeks to match the performance of the Morningstar US Dividend Growth Index.
The Morningstar US Dividend Growth Index is composed of U.S. equities with a history of consistently growing dividends.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for DGRO are 0.08%, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.29%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 22.30% of the portfolio. Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Exxon Mobil Corp (XOM) accounts for about 3.11% of the fund's total assets, followed by Jpmorgan Chase & Co (JPM) and Apple Inc (AAPL).
Its top 10 holdings account for approximately 25.93% of DGRO's total assets under management.
Performance and Risk
The ETF has lost about -0.80% so far this year and is up roughly 9.62% in the last one year (as of 05/06/2025). In the past 52-week period, it has traded between $55.22 and $64.94.
DGRO has a beta of 0.84 and standard deviation of 14.86% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 415 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.
WisdomTree U.S. Quality Dividend Growth ETF (DGRW) tracks WisdomTree U.S. Quality Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. WisdomTree U.S. Quality Dividend Growth ETF has $14.66 billion in assets, Vanguard Dividend Appreciation ETF has $86.04 billion. DGRW has an expense ratio of 0.28% and VIG charges 0.05%.
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 JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis Report WisdomTree U.S. Quality Dividend Growth ETF (DGRW): ETF Research Reports Vanguard Dividend Appreciation ETF (VIG): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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