ETF Battles: Growth vs. Yield - DGRO vs. FDVV, Dividend Showdown

Well, dividend investing is not dead. It's evolving, and ETFs are leading the charge. So, do you want consistent dividend growth, or do you want high yield? What are you seeking? Maybe you want to have a lower yield with potential higher capital growth down the line.

Well, today's audience requested ETF battle is a heavyweight bout between dividend ETFs from Fidelity and BlackRock. It's DGRO versus FDVV. Which is the better choice? Stick around. This is ETF Battles. I'm Ronda Legy, and this is the place that we gather together to analyze and judge ETFs. Send me your ETF matchup request in the comment section below. Be sure to include your ETF ticker symbols. We could do double, triple, and quadruple headers. And for those of you that are first-time viewers, hit the subscribe button to join our community. Also, don't forget to hit the description section below. We've got our program sponsor located there. Be sure to visit direction.com.

So, today's audience requested matchup was from Michael Kappler. This is a viewer who requested FDVV from Fidelity Investments versus DGRO from BlackRock. And this is a heavyweight bout between two dividend-focused ETFs. So, which is the better choice? Well, judging today's contest, we got a duo extraordinaire, John Davi with Astoria Portfolio Advisors, and Athan Ferris with Bloomberg. Guys, welcome back. Great to have you.

So, we got our four battle categories: cost, exposure, strategy, performance, and yield are combined. And then mystery. I'm going to give each of you an opportunity to weigh in with your analysis. At the end of the program, we will declare an overall winner. Keep in mind that none of the battle outcomes we do on this program are ever known in advance by myself or our judges. So the first category is cost. John, please get us started.

Sure. So DGRO is eight basis points. The Fidelity products 16 basis points. So DGRO is cheaper. If you're sort of a buy and hold, you're not going to trade in and out. DGRO is an interesting product for sure. But I think everyone should think about total return. They should think about trade and liquidity. I'm sure Tom Eton is going to talk about trade and liquidity, but when you start comparing actually how these things return and how they perform, it's a very different story, but just purely on management fees, DGRO is a winner by eight basis points.

Athan, you're up next. How do you see it when it comes to cost? Yeah, all good points, and I know what the performance is already, right? But obviously, just by choosing something necessarily because it's cheaper headline doesn't always mean it's better performer, but to John's point, if these are long-term plays, which dividends a lot of times are, you want to try to minimize cost as possible. Eight basis points for the DGRO product, it's massive. It's 33 billion versus 5 billion for the Fidelity product. They're all US stocks, so they both trade really well. I just think it's pretty, it's half the price of the Fidelity one. So, I think just from a headline perspective, you have to give this one to DGRO.

All right, let's get into exposure strategy and compare these two ETFs versus each other. Athan, you're still up, so break it down for us. Sure. So, they're both dividends, dividend focused, but they're a little bit different. The Fidelity one is called the high dividend ETF. So, as you can imagine, it's going after, it's looking at yield companies that have the highest yield. It's also got another factor in there, like payout ratio, like how much is the potential for them to keep raising the dividend and dividend growth versus DGRO, which is just more stable companies that have consistently raised their dividends.

So Fidelity one is also very concentrated. It's only 100 names. You get almost 400 in the DGRO product. So it's a little bit more watered down. Just be aware with this, you're going to have some different sector tilts. So with the Fidelity product, you tend to be a little bit overweight tech than the DGRO product. It would overweight financials. So just be wary of the different sector weights that you'll have. This is a tough one. I don't know if one's necessarily better. I think if you want something that's more kind of stable and quality, the DGRO one, lean towards that one. If you want something that just has highest yield or has the potential to keep raising, have FDVV. I think I'm pretty split on this one. I think they're both really unique methodologies. I don't know if one is necessarily that much better. So I think I'm going to do a split decision on this one.

Thank you, Athan. John, you're up next. Exposure strategy. How do you see it? Well, I'm going to do my usual screen sharing. Just give me a moment here. I know you like when I share my screen.

All right. So I think it's nice to talk about dividends, something that's, people like Warren Buffett have been doing for decades and decades because I feel like everyone, all they want to do is talk about AI and Bitcoin and growth, but in your portfolio, when you construct a portfolio, you should have diversification, that's what we preach to our financial advisors. So a lot of the core of your portfolio could be in something that looks like low-cost index beta. But if you think about your traditional 60/40, you shouldn't put all 60% in low-cost beta. You should have diversified factors, diversified sectors. So dividends, which have been largely ignored the last two, three years as we've had this epic AI induced rally. You really want to load up these two ETFs into a portfolio construction tool. You could use Bloomberg Port, Athan's firm, or something like a Vanguard, which is free for advisors. So when you load it up, you kind of see how these things shape up from a style box standpoint, valuation standpoint.

We principally at Astoria, we're a high conviction asset manager. We don't like using, we like more concentrated portfolio. So FDVV fits our style box, right? 100 securities. The ETFs that we manage, PPI, for instance, has like 60 securities. ROE has like 100. So I don't like buying big blocks, DGRO, which has 398 securities. What Tom also was alert to, I think makes a lot of sense, where do you want to be in terms of sectors? So we like tech. We like tech a lot. So FDVV has more tech exposure, which I think is very interesting. So I do like FDVV. We'll talk about performance in a second, which is not even close. I mean, FDVV blows out DGRO out of the water. So I'm going to be partial to FDVV in this conversation. So purely from an exposure standpoint, I like what FDVV is doing. So I'm going to give that as a category winner.

Got you down. That takes us next to performance and yield. And you're still up, John. So I don't want to steal your thunder. You kind of alluded to it, but break it down for us. How do these ETFs look in terms of performance and yield? Yeah, I mean, so whether it's three months year to date, one year, three year, five year, I mean, it's substantial outperformance on a year-to-date basis. It's about 250 basis points. On a one-year basis, it's 400 basis points. This is FDVV outperforming DGRO. On a three-year basis, it's like 17%. So I mean it's just clear in a way. I mean, even on a five-year basis, it's like 40%. So clearly there's an alpha signal that Fidelity has uncovered. And I wouldn't necessarily say, I mean, one's doing one thing and one is one's giving high dividend yield in stocks, concentrated, making a lot of idiosyncratic stock specific bets. DGRO is doing something different. It's dividend growers, right? So it's companies that have steadily increased their dividend. So anyway, FDVV is a battle category winner across a number of trailing periods.

Got you down. Athan, you're up next. How do you see it in terms of performance and yield? Yeah, I agree. I think it's not even close. FDVV has higher yield because it's a high dividend ETF and it's got better performance. And again, a lot of it is a tech bet, right? It's got bunch of semiconductors in there. In hindsight, that's helped a lot. The concentrated nature of it has helped a lot. So it's not even close. I think when you sort of look at any metric for a dividend fund, FDVV is the winner here.

All right, that takes us next to our mystery category. This is where our judges can give us a factor or thing that's crucial to this contest. Athan, what's your mystery battle category? Which of these two ETFs wins it? So, one thing that we always like to look at is sort of concentration and how complimentary is it to something like SPY. So, you just have to assume a lot of people hold SPY already, right? So, it depends how you want to use this in your portfolio. If you want this to be your core holding and replace SPY just because of the bigger tech weight in FDVV, then it makes more sense.