Microsoft Announces Dividend Increase, DGRW Captures | ETF Trends

Tech giant Microsoft has announced that it will be increasing quarterly dividends by 10% compared to last quarter’s dividends, a six-cent boost to $0.68 a share.

As of the end of the day on October 12, shareholders of Microsoft this year will also be able to vote their shares at the annual shareholder’s meeting on December 13, 2022, to be hosted virtually by Satya Nadella, chairman and CEO of Microsoft.

Microsoft is a component of most portfolios and is carried in over 500 ETFs. As a dividend-paying company, it’s likely grown its weighting within portfolios this year as many advisors and investors have gravitated towards dividend-paying companies in challenging market times. Dividend funds have been enormously popular in 2022, and with market uncertainty looking to persist, they are likely to remain a strong play going into the last quarter of the year.

The WisdomTree US Quality Dividend Growth Fund (DGRW) invests in large-cap U.S. equity companies that are growing their dividends and applies both quality and growth screens to securities. The fund seeks to track the WisdomTree U.S. Quality Dividend Growth Index, a fundamentally weighted index based on dividend projections for the next year, which screens companies for long-term growth expectations, return on equity, and return on assets.

“DGRW takes a more forward-looking approach to dividend growth compared to other ETFs, which has resulted in higher exposure to information technology companies. Many tech companies do not have 10 let alone 20-year records of dividend growth but are positioned to return cash to shareholders in the future,” explained Todd Rosenbluth, head of research at VettaFi.

Microsoft Corp (MSFT) is the third largest holding of the fund at a 4.12% weight, preceded by Johnson & Johnson (JNJ) at 5.11% weight and Apple Inc. (AAPL) at 5.13% weight.

DGRW continues to experience healthy, sustained inflows this year. In the last month (8/16/2022-9/16/2022), the fund had net flows of $292.43 million. In the last three months, DGRW experienced net flows of $660.68 million.

The index is made up of the 300 companies from the WisdomTree U.S. Dividend Index that have the best-combined rank of growth and quality factors mentioned above. The index is dividend-weighted on an annual basis so that it reflects each company’s aggregate cash dividend shares proportionately, with the highest dividend-paying companies weighted the heaviest.

Securities within the index are capped at 5% individually, and most sectors cannot make up more than 20% — information technology is one exception at a 25% limit, while real estate is the other at a 10% cap.

DGRW has an expense ratio of 0.28%.

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