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iShares Core Dividend Growth ETF: A Stable, Low-Risk Fund

Published Wed, 10 Jun 2020 13:26:32 -0400 on Seeking Alpha

DGRO is a highly diversified fund that closely tracks the Morningstar US Market IndexSM.
The ETF has witnessed an upward momentum and is currently 10% off its 52-week high.
Valuation seems appropriate for the investment and the dividend yield looks decent, especially amidst low interest rates.
If you missed out on the recent rally in stock markets and are looking to invest in a diversified fund, then the iShares Core Dividend Growth ETF (DGRO) could fit your needs. In an environment of low interest rates, the fund offers a stable source of yield to its investors. At its low, the fund had a 12-month trailing yield of 3.4%, which now currently stands at 2.5%. And not only has it provided a consistent yield, but it also developed a strong momentum in share price from April onward. Currently, it is positioned at only 10% below its 52-week high, which, in this environment, is the value tilt you might want to change to after growth has surged.
Break down of its constituents The fund looks to replicate the performance of Morningstar US Market IndexSM that is a highly diversified index almost covering the entire universe of publicly-traded stocks in the US. In terms of sector-wise breakdown, the portfolio seems highly distributed.

Source: Seeking Alpha

Source: Seeking Alpha
With Financials being a heavyweight in the portfolio, the fund has benefitted from the recent rally in bank stocks as yields have increased in spread and level. Even if the sector was to come under some pressure, looking at the dividend yields of JPMorgan Chase & Co. (3.45%) (NYSE: JPM) and Wells Fargo & Co. (7.08%) (NYSE: WFC) should provide some downside protection. The other two leading sectors are Technology and Healthcare, which have been less affected by the pandemic and are back on track, with several technology majors trading at new all-time highs.
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