Dividends: they’ve been hot towards the end of this year, and for good reason, offering equity investments that cushion portfolios with current income. There’s a heaping helping of uncertainty around the corner in the new year with the Fed’s rising rate scheme possibly inciting a recession, so investors on the lookout for a 2023 dividend ETF candidate may want to follow the WisdomTree US Quality Dividend Growth ETF (DGRW) over the next few weeks.
The ETF recently passed its 200 Day Simple Moving Average (SMA) hitting $61 at time of writing, compared to its $60 SMA. While it inched close to overbought territory earlier in the month, it’s turned the other way, at 41 in the Relative Strength Index (RSI) indicator.
DGRW tracks the WisdomTree U.S. Quality Dividend Growth Index and charges just 28 basis points. Its tenth birthday is next year, having launched back in 2013, and it currently sits at $7.4 billion in AUM. While the first half of the year was a bit up and down in flows — it lost about $300 million in outflows in one week in May — it will finish a tumultuous 2022 with $904 million in net inflows over one year.
It’s outperformed both its ETF Database Category Average and its Factset Segment Average over one month, three months, and one year as well, often by a few hundred basis points. When it comes to its annual dividend yield, it’s also outperformed those categories with 1.8% compared to 0.95% and 0.78% respectively.
The strategy focuses on the potential for dividend growth instead of just looking backward to see which firms have produced solid dividend increases, mixing forward-looking earnings estimates with historical return on assets and equity. DGRW selects the top three hundred names with the firms projected to pay more dividends are weighted more heavily.
There are certainly a plethora of dividend-paying equities out there, so finding the right ones will be an important task for investors looking to start strong next year. DGRW’s approach and momentum right now could make it a solid 2023 dividend ETF to watch for the next few weeks, and perhaps one to consider past that as well.
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