DGRO focuses on dividend growth and tracks the Morningstar US Dividend Growth Index. The selection process includes the following criteria:
Dividend Growth History: Companies must have increased their dividends for at least 5 consecutive years, ensuring a consistent track record of growth.
Payout Ratio: Firms with a payout ratio (dividends as a percentage of earnings) above 75% are excluded. This ensures companies retain enough earnings to sustain and grow dividends.
Earnings Stability: Stocks are screened for consistent earnings over time, supporting long-term dividend sustainability.
Market Capitalization: The focus is on large- and mid-cap U.S. stocks, targeting established, stable companies.
This results in a diversified portfolio of approximately 445 stocks, spanning sectors like financials, technology, and energy. DGRO aims to capture companies with the potential for ongoing dividend increases, appealing to investors seeking both income and growth.