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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $32.37 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund, before fees and expenses, 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
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.
Operating expenses on an annual basis are 0.08% for this ETF, which makes it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.19%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 23.1% of the portfolio --while Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Microsoft Corp (MSFT) accounts for about 3.58% of the fund's total assets, followed by Jpmorgan Chase & Co (JPM) and Broadcom Inc (AVGO).
DGRO's top 10 holdings account for about 26.63% of its total assets under management.
Performance and Risk
Year-to-date, the iShares Core Dividend Growth ETF has added roughly 6.54% so far, and is up about 14.46% over the last 12 months (as of 07/09/2025). DGRO has traded between $55.22 and $65.22 in this past 52-week period.
The fund has a beta of 0.83 and standard deviation of 14.02% for the trailing three-year period, which makes DGRO a medium risk choice in this particular 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 $15.95 billion in assets, Vanguard Dividend Appreciation ETF has $92.86 billion. DGRW has an expense ratio of 0.28% and VIG changes 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 ReportsThis article originally published on Zacks Investment Research (zacks.com).
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