FDVV - DIVB: A Well-Diversified Low-Cost Total Shareholder Yield ETF Worth Watching

2024-04-03 15:28:25 ET

Summary

• DIVB is a well-diversified total shareholder yield ETF with a low 0.05% expense ratio. A strategy change in December 2022 boosted its dividend yield to approximately 3%.
• While DIVB's actual dividend growth prospects aren't as strong as they look on paper, they're still solid. Among large-cap value ETFs, it ranks above average on dividend yield, growth, and consistency.
• However, a weak dividend safety and low 2.07% estimated earnings growth rates are key weaknesses. DIVB's low P/E compensates investors, but it's not built for bull markets or high-interest-rate environments.
• DIVB is a solid choice for income investors, but I still prefer VIG and FDVV for total returns. Along with SCHD, this article evaluates all four ETFs fundamentally to highlight the strengths and weaknesses of each.

Investment Thesis

The iShares Core Dividend ETF ( DIVB ) features a 22.25% three-year dividend growth rate, making it a compelling buy for DGI investors. However, as the saying goes, if something seems too good to be true, it probably is. That's certainly the case with DIVB, as a December 2022 strategy change renders the dividend growth rates below meaningless. ...

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