DGRO: Market Returns Plus Double-Digit Dividend Growth

Summary

• DGRO provides investors with a double-digit dividend growth rate for just 0.08% in fees. It has $22 billion in AUM and a 2.01% trailing dividend yield.
• While I don't expect significant short-term outperformance versus the S&P 500, DGRO trades at an adequate discount on forward earnings for the earnings growth it gives up.
• This quarter's earnings surprises are coming in lower than before, so I expect investors will turn more to the cheaper, less-volatile stocks DGRO holds.
• I don't expect DGRO to significantly outperform the S&P 500 in the short term, but at the same time, I see no reason to sell it. DGRO remains a solid core dividend ETF and is a hold today.

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Investment Thesis

The iShares Core Dividend Growth ETF (NYSEARCA:DGRO) is for the long-term investor who wants a high dividend yield in the future but doesn't necessarily need one today. While its 2.01% yield isn't anything

Analyst’s Disclosure:I/we have a beneficial long position in the shares of DGRO, SCHD, IVV, MSFT either through stock ownership, options, or other derivatives. 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.