Six sectors – financial services, consumer staples, industrials, technology, healthcare and consumer discretionary – command double-digit allocations in DGRO. Nine of the top 10 holdings in the ETF are members of the Dow Jones Industrial Average.
Additionally, dividend-paying stocks typically outperform those that do not pay over the long haul, with less volatility, due to the compounding effect of dividends on the investment’s overall return.
Over the past 40 years, companies that boost payouts have proven to be less volatile than their counterparts that cut, suspended or did not initiate or raise dividends.
Dividend growth as a means of trumping inflation could and arguably should serve to highlight the advantages of the ETFs that focus on dividend growth stocks, such as VIG. That group is comprised of well-established ETFs that emphasize dividend increase streaks as well as a new breed of funds that look for sectors chock full of stocks that have the potential to be future sources of dividend growth.
For more information on dividend stocks, visit our dividend ETFs category.