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ETF Specialist

This Quality Dividend-Growth ETF Looks to the Future

This strategy effectively targets firms that should have the capacity to raise their dividends in the future.

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Dividend growth is nice if you're along for the ride, but it can be challenging to identify future dividend-growth leaders. A record of consistent dividend growth is often a good sign, but requiring a lengthy dividend-growth record can preclude investments in firms that recently started paying dividends or whose fundamentals have improved. WisdomTree U.S. Quality Dividend Growth ETF (DGRW) uses forward-looking information to target stocks that can grow their dividends significantly in the future. 

Morningstar Take 
This exchange-traded fund favors highly profitable stocks with durable competitive advantages that should have the capacity to raise their dividends and generate attractive returns over time. But it ignores firms' records of past dividend growth, which reflects managers' willingness to raise their dividends and the stability of the underlying businesses. As a result, DGRW has tended to exhibit slightly greater volatility than Vanguard Dividend Appreciation ETF (VIG). It also charges a higher fee of 0.28%. It warrants a Morningstar Analyst Rating of Bronze. 

Alex Bryan does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.