Dividend investing remains as popular as ever headed into 2024. With concerns about market volatility and lower future returns, investors are searching for stable income generators. However, reaching for high dividend yields can be fraught with risk.
A smarter approach is focusing on dividend growth potential – and that’s exactly what the WisdomTree U.S. Quality Dividend Growth Fund (DGRW) provides.
Why DGRW Stands Out for 2024
The WisdomTree U.S. Quality Dividend Growth ETF offers a compelling mix of attributes that positions it well for continued outperformance in 2024:
- Focus on dividend growth and quality – Screens for earnings quality, return on equity and future payout growth rates rather than just high yields.
- Impressive long-term track record – Outpaced the Dividend Aristocrats benchmark by over 25% over the past 5 years.
- Low expenses – Expense ratio of just 0.28% provides a performance edge versus peers.
- Total returns on par with the S&P 500 – While focused on dividend growth, DGRW has generated similar total returns as the broader market.
These characteristics make DGRW a diversified fund that goes beyond just dividend income. The ETF offers the growth potential to keep generating alpha in 2024 and beyond.
DGRW’s Methodology: The Key to Outperformance
DGRW tracks an index that screens for dividend growth and quality factors when selecting companies. This methodology has been the key driver of its long-term outperformance versus dividend-focused peers.
Specifically, the WisdomTree U.S. Quality Dividend Growth Index screens for:
- Earnings growth and quality – Favors companies with strong earnings quality and growth over the past year.
- Return on equity – Seeks companies generating strong ROE, indicating efficient use of capital.
- Future dividend growth expectations – Analyst dividend growth projections incorporated to identify likely increasers.
This forward-looking multifactor approach gives DGRW an edge in dividend investing that should continue paying off.
Top Holdings: Growth and Income Balance
While DGRW holds prominent large-cap stocks like Microsoft, Apple and Visa, the portfolio also provides exposure to lesser-known mid-caps with exceptional dividend growth.
This blend of mega-cap technology leaders and quality mid-cap dividend payers provides balance across growth and income objectives.
Some of the most compelling 2024 picks among DGRW’s top holdings include:
- Old Dominion Freight Line (ODFL) – Less-than-truckload transport with recession resistance and dividend growth exceeding 30% annually over the past 5 years.
- MarketAxess Holdings (MKTX) – Dominant electronic bond trading platform with minimal debt and payout growth averaging 22% over the past half decade.
- Brown & Brown (BRO) – Fast-growing insurance brokerage with 50 consecutive years of dividend increases.
DGRW’s Impressive Total Return Profile
While DGRW focuses on dividend growth, it has generated total returns similar to the S&P 500 over the long run. This demonstrates its dual nature as an income and growth vehicle.
Over the past 5 years, DGRW delivered a cumulative total return of 105.8% compared to 102.5% for the S&P 500. The ETF achieved equity-like returns driven by its quality stock selection.
With recession risks lingering in 2024, DGRW’s blend of yield and total return potential stands out. Investors get the growth upside of quality stocks along with rising income.
Outlook for 2024: Rising Rates Present a Challenge
Looking ahead to 2024, wisdom tree’s dividend growth approach should help provide resilience if volatility persists. However, there are some potential headwinds on the horizon.
In particular, rapidly rising interest rates could pressure dividend-paying stocks, especially those trading at higher valuations. DGRW’s quality focus helps mitigate this risk, but remains something to monitor.
Maintaining some caution with withdrawals and asset allocations makes sense in 2024. But for long-term dividend investors, DGRW remains a high-quality choice regardless of near-term swings.
Conclusion: The Right Dividend ETF for an Uncertain 2024
With its track record of outperformance, focus on quality, and total return potential, the WisdomTree U.S. Quality Dividend Growth Fund checks all the right boxes headed into 2024.
In an investing landscape filled with risks and uncertainty, DGRW stands out for its ability to provide rising income with an equity-like growth profile. This overlooked dividend ETF has earned a spot in the core of an income-oriented portfolio.
While the path may be bumpy, DGRW remains well-positioned to continue generating alpha over dividend aristocrats and other dividend-focused funds in 2024. Patient investors will be rewarded for sticking with this differentiated dividend growth strategy.