CGDG: A Dividend Growth ETF with International Diversification and Active Management

The Capital Group Dividend Growers ETF (NYSEARCA:CGDG) is a dividend growth ETF with international diversification, actively managed with a focus on balance sheet strength, cash flows, and dividend quality. The fund identifies long-term reliable compounders, offering investors a reliable source of income and potential long-term growth.

The Capital Group Dividend Growers ETF (NYSEARCA: CGDG) is a dividend growth ETF with international diversification, actively managed with a focus on balance sheet strength, cash flows, and dividend quality. Launched in the second half of 2023, CGDG has quickly gained traction with a total asset under management (AUM) of approximately $2.66 billion in less than two years [2].

CGDG invests primarily in common stocks of companies around the world that the investment adviser believes have the potential to provide combinations of current yield and dividend growth over the long-term. The fund is non-diversified, holding 97 stocks with a relatively small top holding concentration risk, with the top holding (Broadcom) accounting for approximately 4.2% of total holdings [2].

The ETF's active management is evident in its portfolio composition, which includes a mix of US and international companies. While it is anchored in the US, CGDG also provides exposure to developed markets outside the US and a small portion (approximately 5%) to emerging markets, including China, Taiwan, and Hong Kong [2]. This international diversification helps mitigate risks associated with a single geographic market.

The sectoral allocation of CGDG is well-diversified, with financials, technology, consumer staples, and healthcare sectors all represented. Technology accounts for approximately 17% of the portfolio, with names like TSMC, Broadcom, KLA, and Tokyo Electron providing a growth flavor to the portfolio [2]. The healthcare sector, which accounts for approximately 10% of the portfolio, is a significant component of the fund's holdings, adding to its market agnostic nature.

CGDG's yield is relatively stable and reasonable, at approximately 2%, providing a balance between compounding and payouts. The fund's performance, when compared to similar dividend-focused ETFs like DGRO and VYMI, shows that CGDG has matched VYMI for total returns despite its lower yield. This indicates a focus on long-term compounding rather than aggressive payouts [2].

In conclusion, the Capital Group Dividend Growers ETF offers a unique blend of international diversification, active management, and a focus on dividend quality. Its performance so far, despite being a relatively new ETF, has been impressive, with high total returns and relatively managed drawdowns. While the fund's track record is still short, its manager diversification and the Capital Group's reputation provide a strong foundation for future performance.

References:
[1] https://finance.yahoo.com/quote/CGDG/
[2] https://seekingalpha.com/article/4799771-cgdg-etf-global-dividend-grower-with-active-edge-smart-diversification