Dividends had a great year last year but have fallen off in 2023 – right? While some bigger index-based dividend strategies like Schwab US Dividend Equity ETF (SCHD ) have struggled significantly, others have performed very well. Dividends can still play an important role in a portfolio this year, with TDVG a dividend growth ETF to consider.
Investors and advisors are likely very familiar with the benefits of dividends, adding current income to portfolios. That income can help boost a portfolio in uncertain, volatile times, yes, but it can also be reinvested. However, a dividend growth ETF adds an element that can help it outperform in a more growth-minded environment.
The T. Rowe Price Dividend Growth ETF (TDVG ) has taken that approach and yielded some very positive returns in doing so. TDVG actively invests in global, large, and mid-cap firms with above-average growth measured by dividends and earnings. TDVG’s managers actively consider a firm’s balance sheet, cash flow, and whether it has a sustainable competitive advantage.
Taken together, that’s helped TDVG return 8.1% YTD. That not only outperforms SCHD’s negative YTD return but also outperforms TDVG’s Factset Segment average. TDVG has also doubled up on SCHD’s one-year performance, with TDVG returning 7.3% over one year.
Moreover, it’s important to consider the power of active investment. Active investing makes a portfolio more responsive to events. The dividend growth ETF’s active approach allows it to respond not only daily or weekly but even to intra-day changes. The strategy’s dividend approach has kept it right in line with the FactSet Segment average, meanwhile, at a 1.25% annual dividend yield.
While the U.S. economy looks increasingly set to pull off a “soft landing,” dividends may have lost some luster. However, dividends have positive, growth-oriented attributes, as seen in the T. Rowe Price Dividend Growth ETF approach. Charging 50 basis points and set to hit its three-year milestone next month, TDVG may be one to watch in the weeks ahead.
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