CGDV - CGDV: Concentrated ETF Captures More Upside And Outperforms S&P 500

2024-05-28 22:56:44 ET

Summary

• Capital Group Dividend Value ETF focuses on companies that pay dividends and have the potential to pay dividends, while providing a dividend yield of 1.7%.
• CGDV is likely to provide a superior return comprised of both dividend income and capital appreciation. The more focused set of holdings captures more upside movement.
• The fund has a short history but has a reasonable expense ratio and a strategy of investing in dividend-paying stocks with market caps larger than $4B.
• The inclusion of newly minted dividend companies such as Meta Platforms and Alphabet has helped this ETF outperform its counterparts.
• Interest rate cuts can serve as a catalyst for CGDV's top industry allocations, as cheaper debt financing can fuel more growth in these sectors.

Overview

I've spent the majority of 2024 focusing on asset classes that have a higher risk profile than traditional dividend growth investments. This has included things such as business development companies, closed end funds, and REITs. However, I wanted to now take some time to cover more traditional ETFs that may be geared towards the investor with a much lower risk tolerance. The Capital Group Dividend Value ETF ( CGDV ) is a fund that seeks to produce consistent income level that exceeds the average dividend yield of the S&P 500. They do this by specifically focusing on companies that pay dividends and have the potential to pay dividends....

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