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iShares Core Dividend Growth ETF: A Stable, Low-Risk Fund


  • DGRO is a highly diversified fund that closely tracks the Morningstar US Market IndexSM.
  • The ETF has witnessed an upward momentum and is currently 10% off its 52-week high.
  • Valuation seems appropriate for the investment and the dividend yield looks decent, especially amidst low interest rates.
  • I do much more than just articles at The Lead-Lag Report: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

If you missed out on the recent rally in stock markets and are looking to invest in a diversified fund, then the iShares Core Dividend Growth ETF (NYSEARCA:DGRO) could fit your needs. In an environment of low interest rates, the fund offers a stable source of yield to its investors. At its low, the fund had a 12-month trailing yield of 3.4%, which now currently stands at 2.5%. And not only has it provided a consistent yield, but it also developed a strong momentum in share price from April onward. Currently, it is positioned at only 10% below its 52-week high, which, in this environment, is the value tilt you might want to change to after growth has surged.

Break down of its constituents

The fund looks to replicate the performance of Morningstar US Market IndexSM that is a highly diversified index almost covering the entire universe of publicly-traded stocks in the US. In terms of sector-wise breakdown, the portfolio seems highly distributed.

Source: Seeking Alpha

Source: Seeking Alpha

With Financials being a heavyweight in the portfolio, the fund has benefitted from the recent rally in bank stocks as yields have increased in spread and level. Even if the sector was to come under some pressure, looking at the dividend yields of JPMorgan Chase & Co. (3.45%) (JPM) and Wells Fargo & Co. (7.08%) (WFC) should provide some downside protection. The other two leading sectors are Technology and Healthcare, which have been less affected by the pandemic and are back on track, with several technology majors trading at new all-time highs.

Microsoft (MSFT), Johnson & Johnson (JNJ), Apple (AAPL), Chevron (CVX), and Verizon Communications (VZ) are just a handful of names in the top 10 holdings, all of which have been around

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This article was written by

Michael A. Gayed, CFA profile picture
Anticipate Corrections and Volatility with Award Winning Research
5x Dow & Founders Award Winner. Risk-On/Off $RORO, Junk-On/Off $JOJO, & $ATACX Portfolio Manager. Anticipate Crashes, Corrections, & Bear Markets With The Lead-Lag Report. Sign Up For 2 Weeks Free.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This writing is for informational purposes only and Lead-Lag Publishing, LLC undertakes no obligation to update this article even if the opinions expressed change. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. It also does not offer to provide advisory or other services in any jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Lead-Lag Publishing, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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