DGRW: An ETF Combining Quality, Growth And Yield

Summary

• DGRW strategy and performance.
• Comparing DGRW with a reference strategy.
• Scanning DGRW with quality metrics.
• Looking for a helping hand in the market? Members of Quantitative Risk & Value get exclusive ideas and guidance to navigate any climate. Get started today »

This dividend ETF review series aims at evaluating products regarding the relative past performance of their strategies and quality metrics of their current portfolios.

DGRW strategy and performance

The WisdomTree U.S. Quality Dividend Growth Fund (NASDAQ:DGRW) tracks the WisdomTree U.S. Quality Dividend Growth Index, which is a strategy following systematic rules. The SEC Yield of DGRW is currently 1.95%.

As described in the prospectus,

The Index is comprised of the 300 companies in the WisdomTree U.S. Dividend Index with the best combined rank of growth and quality factors. The growth factor ranking is based on long-term earnings growth expectations, while the quality factor ranking is based on three year historical averages for return on equity and return on assets. The Index is dividend weighted annually.

Since inception (05/22/2013), DGRW is almost on par with the S&P 500 (SPY), which is an excellent performance among dividend-oriented ETFs.

	Annual.Return	Drawdown	Sharpe ratio	Volatility
DGRW	13.01%	-30.13%	0.89	13.94%
SPY	13.61%	-32.05%	0.92	14.04%

Click to enlarge

The next chart plots the equity value of $100 invested in DGRW and SPY since DGRW inception.

Comparing DGRW with a reference strategy based on dividend and quality

In previous articles, I have shown how some factors may help cut the risk in a dividend portfolio: Return on Assets, Piotroski F-score, Altman Z-score, Payout Ratio.

The next table compares DGRW since inception with a subset of the S&P 500: stocks with an above-average dividend yield, an above-average ROA, a good Altman Z-score, a good Piotroski F-score and a sustainable payout ratio. The subset is rebalanced quarterly.

	Annual.Return	Drawdown	Sharpe ratio	Volatility
DGRW	13.01%	-30.13%	0.89	13.94%
Large cap reference subset	12.41%	-32.79%	0.8	15.17%

Click to enlarge

Past performance is not a guarantee of future returns. Data Source: Portfolio123

DGRW marginally beats this dividend

Analyst’s Disclosure:I am/we are long VIG, DNL. 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.