TBG: Potent Dividend Strategy, Yet Liquidity And Returns Weigh On The Rating

2025-05-21 00:26:52 ET

Summary

• TBG is a 2.87% yielding actively managed dividend ETF with a concentrated portfolio of just 34 companies.
• TBG Dividend Focus ETF has a potent strategy, as it has beaten a few peers since its inception, though it has lagged the market.
• The Fund has a value tilt and excellent quality, but low-fee passively managed SCHD looks stronger, with higher weighted average ROA and dividend growth rates.
• Considering its promising strategy that comes with a high expense ratio of 59 bps and imperfect liquidity, a Hold rating is the golden mean.

I initiated coverage of the TBG Dividend Focus ETF ( TBG ), an actively managed exchange-traded fund, in February of this year. My initial assessment was rather unenthusiastic, despite this vehicle having fairly strong performance and mostly robust fundamentals. The gist is that a few issues weighed on my sentiment back then, namely:

• Its relatively short history (just 14 full calendar months as of the previous writing), which means it had a lot to prove
• Its lackluster growth characteristics (most notably, the weak 3-year weighted average free cash flow growth rate of its portfolio)

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