As has been previously noted, a significant part of DGRW’s past advantage and future allure comes from its technology sector exposure. VIG’s exposure to that sector is fair among some dividend ETFs at 10.4%, but the bulk of that exposure is concentrated among just two stocks – IBM (NYSE: IBM) and Qualcomm (NasdaqGS: QCOM).
Conversely, tech is DGRW’s largest sector weight at 22.2% and because the ETF is not restricted by dividend increase streaks, it has been getting a boost from the likes of Apple (NasdaqGS: AAPL) and Microsoft (NasdaqGS: MSFT). Those are DGRW’s second- and third-largest holdings, respectively, and combine for 9.7% of the ETF’s weight. [Dividend Growth ETF Grows Up]
On its own, Apple is nearly 4.5% of DGRW’s weight. While that may not sound like much, that exposure has proven efficacious.
“An approximate 4.5% over-weight to Apple over the time period contributed 2.3% toward DGRW’s outperformance. Even though Apple only reinstituted its dividend in 2012, it is now the second-largest dividend payer in the U.S., and it is responsible for approximately 2.8% of total dividends paid.3 The NASDAQ US Dividend Achievers Select Index had zero exposure to Apple over the period, and, based on the Index’s current methodology, Apple would not be eligible for inclusion until 2023,” according to Schwartz.
WisdomTree U.S. Dividend Growth Fund
Todd Shriber owns shares of DGRW. Tom Lydon’s clients own shares of Apple.