Better Dividend Growth Machine For August 2024: DGRO Vs. VYM

seekingalpha08-01

Dividend growth investing compounds wealth through reinvesting dividends, increasing earnings per share, and growing dividends.iShares Core Dividend Growth ETF and Vanguard High Dividend Yield Index ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2456100843?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1072593728/image_1072593728.jpg","is_english":true,"pubTime":"2024-08-01 19:05","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2456100843","market":"us","top_or_hot":-1,"title":"Better Dividend Growth Machine For August 2024: DGRO Vs. VYM","media":"seekingalpha","content":"<div>\n<p>Dividend growth investing compounds wealth through reinvesting dividends, increasing earnings per share, and growing dividends.iShares Core Dividend Growth ETF and Vanguard High Dividend Yield Index ...</p>\n\n<a href=\"https://seekingalpha.com/article/4708968-better-dividend-growth-machine-august-dgro-vs-vym\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Better Dividend Growth Machine For August 2024: DGRO Vs. VYM</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBetter Dividend Growth Machine For August 2024: DGRO Vs. VYM\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-01 19:05 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4708968-better-dividend-growth-machine-august-dgro-vs-vym><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Dividend growth investing compounds wealth through reinvesting dividends, increasing earnings per share, and growing dividends.iShares Core Dividend Growth ETF and Vanguard High Dividend Yield Index ...</p>\n\n<a href=\"https://seekingalpha.com/article/4708968-better-dividend-growth-machine-august-dgro-vs-vym\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"DGRO","symbol_name":"iShares Core Dividend Growth ETF","start_time":0,"source_url":"https://seekingalpha.com/article/4708968-better-dividend-growth-machine-august-dgro-vs-vym","article_id":"2456100843","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1072593728/image_1072593728.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2456100843","pubTimestamp":1722510300,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Dividend growth investing compounds wealth through reinvesting dividends, increasing earnings per share, and growing dividends.iShares Core Dividend Growth ETF and Vanguard High Dividend Yield Index F","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"DGRO":"iShares Core Dividend Growth ETF","GB00BDT5M118.USD":"天利环球扩展Alpha基金A Acc","GB00B4QBRK32.GBP":"FUNDSMITH EQUITY \"R\" (GBP) INC","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","GB00B4LPDJ14.GBP":"FUNDSMITH EQUITY \"R\" (GBP) ACC","RQI":"Cohen & Steers Quality Income Realty Fund","IE00BJLML261.HKD":"HSBC GLOBAL EQUITY INDEX \"HCH\" (HKD) ACC","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","IE00B775H168.HKD":"JANUS HENDERSON BALANCED \"A5M\" (HKD) INC","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC","BK4548":"巴美列捷福持仓","IE00BK4W5L77.USD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (USD) ACC","IE000W1ABFV2.USD":"PIMCO BALANCED INCOME AND GROWTH \"R\" (USD) INC","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","IE00BK4W5M84.HKD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (HKD) ACC","JEPQ":"J.P. MORGAN NASDAQ EQUITY PREMIUM INCOME ETF","AMLP":"Alerian MLP ETF","IE00B4YYXB79.USD":"PIMCO BALANCED INCOME AND GROWTH \"E\" (USD) ACC","BK4532":"文艺复兴科技持仓","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","BK4554":"元宇宙及AR概念","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","BK4534":"瑞士信贷持仓","VYM":"红利股ETF-Vanguard","IE0034235303.USD":"PINEBRIDGE US RESEARCH ENHANCED CORE EQUITY \"A\" (USD) ACC","BK4533":"AQR资本管理(全球第二大对冲基金)","IE00BJTD4N35.SGD":"Neuberger Berman US Long Short Equity A1  Acc SGD-H","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","IE00B5TLWC47.USD":"BNY MELLON LONG-TERM GLOBAL EQUITY \"B\" (USD) ACC","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","BK4535":"淡马锡持仓","IE00B3S45H60.SGD":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","BK4538":"云计算","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","FDN":"First Trust Dow Jones Internet I"},"translate_title":"2024年8月更好的股息增长机器：DGRO与。VYM","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"VYM":1,"AMLP":1,"JEPQ":1,"RQI":1,"DGRO":1,"US2Y.BOND":0.9,"US10Y.BOND":0.9,"US12M.BOND":0.9,"US30Y.BOND":0.9,"US3Y.BOND":0.9,"US5Y.BOND":0.9,"FDN":0.9,"US6M.BOND":0.9,"US7Y.BOND":0.9,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6},"content_text":"Dividend growth investing compounds wealth through reinvesting dividends, increasing earnings per share, and growing dividends.iShares Core Dividend Growth ETF and Vanguard High Dividend Yield Index Fund ETF are leading dividend growth ETFs.We compare them side-by-side and share our take on which is the best option right now.   PM Images Dividend growth investing is a powerful way to compound wealth over the long term because it provides a very visible demonstration of the wealth-compounding process. First of all, you get the current and very dependable return from the dividend that your stock or ETF pays out. That dividend can then be reinvested, which then leads to even more dividends during the next payout period because you have more shares. This is very similar to what happens when you invest money in a bank and your interest compounds to earn more interest, leading to an exponentially increasing bank account balance. Additionally, dividend growth stocks typically generate a greater amount of earnings than they pay out in dividends. Those retained earnings are then reinvested into the business, either to grow it, buy back stock, or pay down debt. Each of these methods increases the earnings per share, which increases the value of the stock price, further enhancing the compounding process. The growing earnings per share also increase the company's capacity to increase its dividend payout, which further increases the ability to reinvest the dividends and grow the payout even more. This creates a three-pronged method for growing wealth between capital appreciation, reinvested dividends, and growing dividends. While building a portfolio of individual dividend growth stocks is the best way to achieve long-term total return outperformance, and that is what we do, a simpler path is to simply buy a low-cost dividend growth ETF, which invests in a broadly diversified portfolio of dividend growth stocks. While broad diversification means that it is very unlikely to meaningfully outperform the broader market over the long term, it compensates for this by reducing the risk of material underperformance. Any single bad holding's impact on the broader portfolio is mitigated due to the broad diversification. Additionally, ETFs have still proven to be effective long-term dividend growth machines with strong dividend growth track records alongside decent current income yields. With this in view, today we will discuss and compare two very popular dividend growth ETFs: the iShares Core Dividend Growth ETF (NYSEARCA:DGRO) and the Vanguard High Dividend Yield Index Fund ETF (VYM), and share our take on which is a better buy as we head into August 2024. DGRO Vs. VYM: Dividend Yield And Growth On a dividend yield basis, VYM looks to be much more attractive than DGRO, as VYM offers a 2.9% forward dividend yield, whereas DGRO only offers a 2.3% forward dividend yield. That being said, on a dividend growth basis, DGRO seems to have the upper hand. Over the past five years, DGRO's CAGR has been 9.3%. Over the past three years, its CAGR has been 8.86%. And over the past 12 months, it has been 10.84%. In contrast, VYM’s five-year dividend CAGR has been 5.81%, its three-year CAGR has been 6.82%, and its trailing 12-month dividend CAGR is 6.83%. As a result, while VYM is still posting dividend growth rates that easily beat inflation, DGRO’s have been meaningfully higher, making it a much faster compounding asset. DGRO Vs. VYM: Total Returns This is also seen in the funds' comparative performance. Since they have both been trading publicly, DGRO has generated a 209.3% total return compared to VYM’s 158.2% total return, illustrating substantial outperformance. This outperformance is intact even over a narrower timeframe, as over the past five years DGRO has generated a 73.65% total return, whereas VYM has generated 63.88%. Over the past year, they generated virtually identical total returns, with VYM narrowly beating DGRO at 16.4% to 16.23%. Data by YCharts When comparing their expense ratios, we see that DGRO’s total return performance has not been helped by its slightly higher, albeit still very low, expense ratio of 0.08% compared to VYM’s 0.06% expense ratio, making them both among the lowest-cost ETFs, especially dividend ETFs, in the market today. DGRO Vs. VYM: Portfolio Composition When looking at their holdings, we see that the portfolios are fairly similar with financials occupying the top spot in both portfolios, though VYM is slightly more weighted towards financials with a 20.66% exposure, whereas DGRO has 18.22%. However, DGRO has a much higher exposure to healthcare at 17.91% compared to 12.28% for VYM, and technology exposure is 16.76% compared to 12.77% for VYM. VYM does have higher exposure to energy at 10.47%, whereas DGRO’s is 7.72%. Both have very similar exposure to industrials, utilities, and basic materials, while VYM has slightly higher exposure to communication stocks and consumer defensive stocks, as well as consumer cyclical stocks. Overall, VYM’s portfolio is also slightly better diversified, though both portfolios are very broadly diversified with 556 holdings for VYM and 416 holdings for DGRO. Among their top ten, DGRO has slightly greater concentration at 26.72% compared to 24.79% for VYM. Their top holdings also differ to some degree, though both have a lot of overlap, with both having large positions in JPMorgan, Exxon Mobil, Johnson & Johnson, Procter & Gamble, Broadcom, The Home Depot, and AbbVie. However, a major difference is that DGRO has a large position in Apple, whereas VYM has a large position in Walmart. VYM also has a large position in Microsoft, whereas VYM has a large position in Bank of America. This differing emphasis helps to explain why DGRO has a slightly lower yield but much faster growth rate and higher total returns, as its emphasis on including more of the mega-cap tech stocks as opposed to old stalwart consumer and financial stocks has paved the way for it to outperform in the past and generate higher dividend growth rates. Investor Takeaway  While we like both funds and think that both are quality dividend compounders, if we had to pick one, we would pick DGRO simply because we think the greater emphasis on mega-cap tech, along with the portfolio's otherwise heavy allocation to stalwart-type blue-chip stocks, creates better balance and should enable it to generate greater dividend growth. While its yield is a bit lower, neither one is a high-yield stock, and so if you are going to invest in one of these funds, you really want to have outstanding dividend growth, which you get with DGRO. Additionally, it would be very easy to complement DGRO by simply pairing it with an MLP fund like the Alerian MLP ETF (AMLP) or a REIT fund like the Cohen & Steers Quality Income Realty Fund (RQI) to provide greater portfolio balance and to boost the yield. Whereas we feel like with VYM, you would need even greater diversification by adding a tech fund such as the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) to give it more significant mega-cap tech stock exposure. While we think either approach is viable, if we had to pick one, we would rather have DGRO than VYM right now, especially because stocks like Microsoft have recently pulled back, making them more attractive on a risk-adjusted basis.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2456100843"}