DGRO vs VYM: (What’s the Difference)
LAST UPDATED: July 17, 2023 | By Conrad Golly
As an investor, I’m always looking for ways to diversify my portfolio and maximize my returns. Two popular ETFs that I’ve been considering are VYM and DGRO. Both of these ETFs focus on dividend-paying stocks, which can provide a steady source of income for investors. However, there are some key differences between these two funds that are worth exploring.
DGRO vs VYM: First, let’s take a look at VYM, which is the Vanguard High Dividend Yield ETF. This fund tracks the performance of the FTSE High Dividend Yield Index, which includes stocks of companies with above-average dividend yields. VYM has a relatively low expense ratio of 0.06% and a strong track record of performance. It’s important to note that VYM has a higher exposure to the financial services sector, which may not be ideal for investors looking to diversify across multiple industries.
On the other hand, DGRO, which is the iShares Core Dividend Growth ETF, focuses on companies that have a history of increasing their dividends over time.
This fund tracks the performance of the Morningstar US Dividend Growth Index, which includes stocks of companies with a track record of sustained dividend growth. DGRO has a slightly higher expense ratio of 0.08%, but it may be a better option for investors who are looking for companies with a strong track record of dividend growth.
Table of Contents
Comparison of DGRO and VYM
Table Comparison Of DRGO vs VYM
When comparing iShares Core Dividend Growth ETF (DGRO) and Vanguard High Dividend Yield ETF (VYM), there are a few key differences to consider.
Below is a table comparing the two ETFs:
| ETF | Launch Date | Expense Ratio | Index Tracked |
|---|---|---|---|
| DGRO | Jun 9, 2014 | 0.08% | Morningstar US Dividend Growth Index |
| VYM | Nov 9, 2006 | 0.06% | FTSE High Dividend Yield Index |
Comparison of DGRO and VYM
Both DGRO and VYM are passive ETFs, meaning that they are not actively managed but aim to replicate the performance of the underlying index as closely as possible. However, there are some key differences between the two ETFs.
DGRO tracks the Morningstar US Dividend Growth Index, which focuses on companies with a history of consistently growing their dividends. VYM, on the other hand, tracks the FTSE High Dividend Yield Index, which includes companies with high dividend yields.
Another difference between the two ETFs is their expense ratios. DGRO has an expense ratio of 0.08%, which is higher than VYM’s expense ratio of 0.06%. This means that DGRO is slightly more expensive to own than VYM.
When it comes to performance, VYM has historically had a higher dividend yield than DGRO. However, DGRO has had slightly better overall performance in recent years.
According to Mr. Marvin Allen, VYM’s Mean Return is 1.04 points higher than that of DGRO, but DGRO’s Alpha and Beta are 0.70 points lower and 0.88 points higher than VYM’s Alpha and Beta.
Overall, both DGRO and VYM are solid choices for investors looking for exposure to dividend-paying stocks. However, investors should consider their investment goals and risk tolerance when choosing between the two ETFs.
Performance and Returns
DGRO Performance and Returns
DGRO has shown a total return of 140.65% since Oct 2, 2022, according to PortfoliosLab. It tracks the Morningstar US Dividend Growth Index, which consists of US companies that have a history of growing their dividends year over year.
DGRO’s top holdings include Microsoft, Apple, and Johnson & Johnson. DGRO has a dividend yield of 1.85%, according to AskFinny.
VYM Performance and Returns
VYM has provided lower returns than DGRO over the past ten years, according to Mr. Marvin Allen. It tracks the FTSE High Dividend Yield Index, which consists of US companies that have a higher-than-average dividend yield compared to the overall market.
VYM’s top holdings include Microsoft, Apple, and Johnson & Johnson. VYM has a dividend yield of 2.97%, according to AskFinny.
DGRO vs. VYM – Dividend Comparison
VYM has a higher dividend yield than DGRO, according to AskFinny.
DGRO has a higher dividend growth rate compared to VYM, according to Seeking Alpha. DGRO’s dividend growth rate was 7.8% compared to VYM’s 6.1% from 2015 to 2020. DGRO also has a higher percentage of its holdings in dividend-growing companies compared to VYM, according to Minafi.
DGRO and VYM have different investment strategies and objectives. DGRO aims to invest in companies with a history of growing their dividends year over year, while VYM aims to invest in companies with a higher-than-average dividend yield.
Investors should consider their investment goals and risk tolerance before choosing between these two ETFs.
Expense Ratios and Holdings
DGRO Expense Ratio and Holdings
As a passively managed fund, DGRO has a relatively low expense ratio of 0.08%. This means that for every $1,000 invested in the fund, $0.80 goes towards covering the costs of managing the fund.
DGRO’s holdings are primarily focused on large-cap U.S. stocks, with a focus on companies that have a history of increasing their dividend payouts over time. The fund’s top holdings include Microsoft, Johnson & Johnson, and Visa.
VYM Expense Ratio and Holdings
VYM has a lower expense ratio than DGRO, at just 0.06%. This means that for every $1,000 invested in the fund, $0.60 goes towards covering the costs of managing the fund.
VYM’s holdings are also focused on large-cap U.S. stocks, but with a focus on companies that have high dividend yields. The fund’s top holdings include Johnson & Johnson, JPMorgan Chase, and Procter & Gamble.
DGRO vs. VYM – Sharpe Ratio Comparison
When comparing DGRO and VYM, it’s important to look beyond just their expense ratios and holdings. One metric that can be useful for comparing the two funds is the Sharpe ratio, which measures the risk-adjusted return of an investment.
According to PortfoliosLab, DGRO has a higher Sharpe ratio than VYM, indicating that it may be a more attractive investment option for those seeking a balance of risk and return.
Both DGRO and VYM are solid options for investors looking to gain exposure to large-cap U.S. stocks with a focus on dividends.
While DGRO has a slightly higher expense ratio, it may be a better option for those seeking a lower level of risk, as indicated by its higher Sharpe ratio. On the other hand, VYM’s focus on high dividend yields may make it a more attractive option for income-seeking investors.
Risk and Volatility
DGRO Risk and Volatility
As a dividend growth ETF, DGRO is designed to provide investors with exposure to a diversified portfolio of U.S. companies that have a history of consistently increasing their dividends.
While DGRO may offer investors the potential for long-term capital appreciation and dividend income, it is important to consider the potential risks and volatility associated with this ETF.
One of the key risks associated with investing in DGRO is market risk. Like all equity investments, DGRO is subject to market fluctuations and can be affected by factors such as economic conditions, political events, and changes in interest rates.
As a result, investors in DGRO may experience periods of volatility and fluctuations in the value of their investment. Another risk to consider when investing in DGRO is sector risk.
While DGRO is designed to provide exposure to a diversified portfolio of U.S. companies, it is still heavily concentrated in certain sectors, such as information technology, healthcare, and consumer discretionary.
As a result, investors in DGRO may be exposed to sector-specific risks that could impact the performance of the ETF.
VYM Risk and Volatility
VYM is a dividend yield ETF that is designed to provide investors with exposure to a diversified portfolio of U.S. companies that have a history of paying high dividends.
While VYM may offer investors the potential for long-term capital appreciation and dividend income, it is important to consider the potential risks and volatility associated with this ETF.
One of the key risks associated with investing in VYM is market risk. Like all equity investments, VYM is subject to market fluctuations and can be affected by factors such as economic conditions, political events, and changes in interest rates.
As a result, investors in VYM may experience periods of volatility and fluctuations in the value of their investments. Another risk to consider when investing in VYM is concentration risk.
While VYM is designed to provide exposure to a diversified portfolio of U.S. companies, it is still heavily concentrated in certain sectors, such as healthcare, consumer staples, and financials.
As a result, investors in VYM may be exposed to sector-specific risks that could impact the performance of the ETF.
In terms of volatility, VYM has historically been more volatile than DGRO, as measured by its standard deviation.
VYM has also historically offered a higher dividend yield than DGRO, which may be attractive to income-seeking investors.
Bottom Line: GDRO vs VYM
Both are great for their own reasons and its always good to remember you need to take all your investments into account.
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