DGRW - CGDV: Top-Performing Dividend ETF With Excellent Earnings Growth Potential

2024-03-15 23:08:02 ET

Summary

• CGDV only has a short two-year track record, but this actively managed ETF has already demonstrated it's possible for dividend strategies to outperform the broader market.
• While CGDV lacks the downside protection offered by many peers in the large-cap value ETF category, it's one of the few to offer nearly 10% estimated earnings per share growth.
• This feature means dividend ETF investors don't necessarily have to sacrifice total returns for income, though CGDV's modest 1.81% expected dividend yield is not competitive.
• Still, its fundamentals look excellent when compared to more established ETFs with similar yields like VIG and DGRW. In addition, my fund overlap analysis reveals it could make a terrific complementary holding.
• I'm reiterating my buy rating on CGDV.

Investment Thesis

Six months ago, I initiated coverage of the Capital Group Dividend Value ETF ( CGDV ), listing impressive performance, a unique multi-manager structure, and solid fundamentals as reasons for my "buy" rating. Since then, it's slightly outpaced the S&P 500 Index, one of only a handful of large-cap value ETFs to do so over this period....

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