Is WisdomTree U.S. Quality Dividend Growth ETF (DGRW) a Strong ETF Right Now?

Making its debut on 05/22/2013, smart beta exchange traded fund WisdomTree U.S. Quality Dividend Growth ETF (DGRW) provides investors broad exposure to the Style Box - Large Cap Value category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Wisdomtree. It has amassed assets over $15.09 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, DGRW seeks to match the performance of the WisdomTree U.S. Quality Dividend Growth Index.

The WisdomTree U.S. Quality Dividend Growth Index is a fundamentally weighted index that consists of dividend-paying stocks with growth characteristics.

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 this ETF are 0.28%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.60%.

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.

Representing 22.60% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Industrials and Consumer Staples round out the top three.

When you look at individual holdings, Microsoft Corp (MSFT) accounts for about 7.65% of the fund's total assets, followed by Exxon Mobil Corp (XOM) and Apple Inc (AAPL).

DGRW's top 10 holdings account for about 36.59% of its total assets under management.

Performance and Risk

Year-to-date, the WisdomTree U.S. Quality Dividend Growth ETF has lost about -0.20% so far, and is up roughly 8.24% over the last 12 months (as of 05/14/2025). DGRW has traded between $71.28 and $85.66 in this past 52-week period.

DGRW has a beta of 0.85 and standard deviation of 15.02% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 304 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree U.S. Quality Dividend Growth ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $30.93 billion in assets, Vanguard Dividend Appreciation ETF has $89.04 billion. DGRO has an expense ratio of 0.08% 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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This article originally published on Zacks Investment Research (zacks.com).

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