Markets have recovered from a tariff-driven Spring drop, but where will growthier stocks go next? In a year in which active ETFs have taken on even more responsibility in portfolios, active growth ETF investing has performed well. That said, not all active growth investing strategies are created equal. TDVG’s durable approach to active growth could make for a worthy add to diversify equities holdings.
See more: Active ex-U.S. ETF TIER’s Upside Case in 3 Stocks
The T. Rowe Price Dividend Growth ETF (TDVG ) charges a 50 basis point (bps) fee. It actively invests in large and mid-cap companies with above-average growth in earnings and dividends. That has helped it return 7.5% YTD, beating its Factset Segment average in that time. Notably, it has added almost $150 million in the last one month period.
What’s more, according to YCharts, the ETF has sent a recent buy signal that could indicate further momentum. The ETF’s price of $42.52 sits above both its 50 and 200-day Simple Moving Averages (SMAs). Specifically, the fund’s 50-day average sits above its 200-day average, indicating a recent positive swing.
So, what about its approach makes it stand out? The strategy emphasizes dividends when searching for growth opportunities. Specifically, the TDVG leans on fundamental research. The portfolio manager primarily looks for companies with competitive current dividend yields and ones that have consistently paid dividends with an expectation of increasing the payments. Furthermore, the portfolio manager seeks out companies with sustainable competitive business advantages and sound cash flow.
Dividends can sometimes be an indicator for investors that a company is more durable or has stronger internal outlooks. For example, a company with growing dividends may know more than markets about its own prospects. Furthermore, investing in dividends provides the choice of keeping distributions as current income or reinvesting.
Should market uncertainty grow, dividend-paying firms may prove more durable. Providing subtle elements of value among the growth category, finding companies with a solid foundation – rather than fast growing, brittle opportunities – could prove an important differentiator. For those refreshing equities holdings, swapping to an active growth ETF like TDVG could make for a shrewd move.
For more news, information, and analysis, visit our Active ETF Content Hub.
