DGRO - DGRO: Chasing The Wrong Dividend Growth

2024-05-31 07:36:09 ET

Summary

• iShares Core Dividend Growth ETF underperforms the key S&P 500 index due to selecting overvalued and slow-growing dividend stocks.
• DGRO focuses on stocks with a history of growing dividends, but fails to consider attractive prices or more volatile dividends.
• The fund missed out on high-growth dividend stocks like GLP-1 biopharmas and underperforms the market by a significant margin.
• The ETF is too expensive for a dividend stock with a P/E multiple of 20x and a dividend yield of only 2.4%.

The dividend growth concept has been hot for years, leading to investors constantly overpaying for such stocks. iShares Core Dividend Growth ETF ( DGRO ) is another prime example of investors chasing a hot concept to end up with results under performing the major index. My investment thesis is Bearish on the dividend growth ETF due to the fund piling into overvalued and slow-growing dividend stocks....

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