We recently compiled a list of the 10 Best Performing Dividend ETFs In 2024. In this article, we are going to take a look at where WisdomTree U.S. Quality Dividend Growth Fund (NASDAQ:DGRW) stands against the other dividend ETFs.
By the end of 2023, the global ETF market had reached $11.1 trillion in assets under management (AUM) and expanded to include 9,149 funds. This growth was driven by several milestones and the diversification of ETF offerings, which now cover equity, fixed income, active management, and alternative strategies. Despite unpredictable factors such as the rise of AI or policy changes, ETFs continue to be a vital investment tool. According to State Street Global Advisors, although only 45% of individual investors in the US use ETFs, nearly 70% of financial advisors and 67% of institutional investors recommend or use them frequently. However, ETFs still make up only 11.25% of the total global investable assets, suggesting there is significant potential for further growth.
Interest in ETFs is rising, particularly among retail investors, with 63% of US investors planning to purchase ETFs in 2024, a sharp increase from 37% during 2022. Active ETFs are experiencing considerable growth, with global inflows hitting a record $166 billion in 2023 and continuing to rise in 2024. Much of this growth is driven by fixed income and alternative investments, while AI-related ETFs, especially in robotics and semiconductors, are attracting large amounts of investment. These trends reflect the growing demand for ETFs as investors seek more flexible and efficient ways to respond to market changes.
A Reuters report from October 2024 highlighted that US ETFs focused on dividend-paying stocks have experienced a significant increase in inflows since the Federal Reserve began its rate-cutting cycle the prior month. In September, 135 US dividend ETFs tracked by Morningstar saw $3.05 billion in inflows, far higher than the average $424 million per month in the first eight months of 2024. However, this trend may slow as US Treasury yields have risen recently, with 10-year Treasury yields hitting a two-month high following strong employment data that suggests the economy is resilient and may not need further large rate cuts.
Dividend ETFs tend to offer stable payouts and potential for growth, addressing challenges regarding unpredictable yields and limited principal growth. However, high-dividend ETFs vary in stability. Some high yields come from struggling companies with weak fundamentals. Riskier ETFs focus on stocks with declining conditions, leading to volatility and potential dividend cuts. Hence, investors should prefer dividend ETFs that manage exposure to unstable companies.
Our Methodology
We curated our list of the best dividend ETFs by choosing consensus picks from multiple credible websites. We have mentioned the year-to-date (YTD) share price performance of each ETF as of December 30, 2024, ranking the list in ascending order of the share price performance. We have also discussed the top holdings of the ETFs to offer better insight to potential investors.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
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WisdomTree U.S. Quality Dividend Growth Fund (NASDAQ:DGRW)
YTD Share Price Performance as of December 30: 16.64%
WisdomTree U.S. Quality Dividend Growth Fund (NASDAQ:DGRW) focuses on US large-cap companies with strong dividend growth and quality characteristics. Designed as a complement to high-yield or large-cap strategies, WisdomTree U.S. Quality Dividend Growth Fund (NASDAQ:DGRW) offers an expense ratio of 0.28% and holds net assets of $14.8 billion as of December 27, 2024. The fund, established on May 22, 2013, has a 30-day SEC yield of 1.50%. It is one of the best performing ETFs to consider for a dividend portfolio.
US energy giant Exxon Mobil Corporation (NYSE:XOM) is one of the largest holdings of WisdomTree U.S. Quality Dividend Growth Fund (NASDAQ:DGRW). Exxon Mobil Corporation (NYSE:XOM)’s acquisition of Pioneer Natural Resources in May 2024 has already delivered results, helping counteract a 17% drop in oil prices during the third quarter and increasing net production by 5% QoQ, with the highest liquids output in over 40 years. This $59.5 billion all-stock deal is Exxon’s largest since merging with Mobil in 1998. Exxon Mobil Corporation (NYSE:XOM) has also delivered exceptional shareholder returns over the past three years, outpacing its competitors. The company recently increased its dividend by 4.2% to $0.99 per share, offering a 3.39% yield. With reduced dependence on high oil prices and consistent performance, Exxon remains a compelling investment option.
According to Insider Monkey’s third quarter database, 86 hedge funds were long Exxon Mobil Corporation (NYSE:XOM), compared to 92 funds in the prior quarter.
Overall DGRW ranks 4th on our list of the best performing dividend ETFs of 2024. While we acknowledge the potential of DGRW as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DGRW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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