Although DGRW is obviously a dividend ETF, it can be said it is also a factor ETF due to the fund’s emphasis on the quality and growth factors. DGRW emphasizes quality through a focus on firms that screen well based on return on assets and return on equity. The growth factor, in this case dividend growth, comes by way of screening for companies that generate ample free cash to support future payout growth. [An Outperforming Dividend ETF]
At the end of the first quarter, 14 of the 15 largest cash hoards among American companies belonged to companies that also pay dividends. Led by Apple (NasdaqGS: AAPL) four of those 14 are found among DGRW’s top-10 holdings. Another four are found in the ETFs next 20 holdings.
Those cash holdings and DGRW’s quality emphasis could prove important because “higher growth expectations and increased exposure to cyclical sectors could become more desirable with improving economic activity and rising rates,” adds Zimmerman.
WisdomTree U.S. Dividend Growth Fund
Todd Shriber owns shares of DGRW. Tom Lydon’s clients own shares Apple.