If you're looking for an investment that you can buy and hold for years, you'll probably want both some safety and potential to earn some terrific dividend income. The iShares Core Dividend Growth ETF (NYSE Arca: DGRO) can fit both of those needs. The exchange-traded fund (ETF) has investments in some of the safest dividend-paying stocks available.
By focusing on dividend stocks that grow their yields, investors know that the businesses are already generally safe in nature; companies without stable or strong financials won't be able to consistently raise their payouts. The top holdings in the ETF include big names such as Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Johnson & Johnson (NYSE:JNJ), JPMorgan Chase (NYSE:JPM), and Pfizer (NYSE:PFE). The fund is also well-diversified as none of those stocks account for even 3% of its total holdings. There are 413 holdings in the portfolio as of Sept. 22. They are also modestly valued, with the fund averaging a price-to-earnings ratio of 15 and a price-to-book multiple of less than three.
Two-fifths of the stocks are either in financials or information technology. Health care stocks account for 17% of the fund's total weight, followed by industrials at 13% and consumer staples at less than 12%. With a modest expense ratio of only 0.08%, investors are getting tons of diversification and a solid source of recurring income with this ETF.
The Core Dividend Growth ETF currently yields 2.1%, which is better than the S&P 500 average of 1.7%. And in the long term, investors will likely see their dividend income rise.
