Capital Group Dividend Value ETF

CGDV

Market cap $30.3B

For long-term investors craving those “sleep-at-night” returns, actively managed ETFs can be a great solution.

VettaFi's Head of Research Todd Rosenbluth discussed the Capital Group Dividend Value ETF (CGDV) on this week's “ETF of the Week” podcast with Chuck Jaffe of “Money Life.” For more news, information, and strategy, visit ETF Trends.

Markets are broadening beyond the dominance of U.S. technology stocks, creating opportunities across international equities, value stocks and fixed income. The Capital Group ETF platform has captured this shift since entering the market four years ago this week.

I recommend iShares Core Dividend Growth ETF (DGRO) and Capital Group Dividend Value ETF (CGDV) as core holdings for income and wealth-building. DGRO offers income stability, low costs (0.08% expense ratio), and strong dividend growth, with a 10-year CAGR of 18.1% and sector diversification. CGDV provides a blend of growth and income, with active management, concentrated holdings, modest international exposure, and impressive NAV and payout growth since inception.

The Capital Group Dividend Value ETF seems to have delivered alpha versus the S&P 500, outperforming with lower beta and downside capture. CGDV's active management leverages a multi-manager approach, focusing on large-cap, dividend-paying U.S. equities, but actual holdings tilt toward tech and profitability leadership.

There are plenty of dividend-paying exchange traded funds (ETFs) out there, but only a handful of them truly stand out from the rest.

For years, value investing has felt akin to waiting for a train that keeps getting delayed. The market has rewarded unbridled growth at any price going back to the mid-2010s.

Dividend investing is increasingly vital amid higher rates and inflation, offering passive income and wealth compounding for retirement. Anchoring a portfolio with quality dividend ETFs like SCHD, FDVV, or CGDV can provide reliable income and potential outperformance. Combining high dividend growers (e.g., V, MA, WM) with stable high-yielders (e.g., VZ, O, ADC, STWD) balances growth and income.

Capital Group Dividend Value ETF is rated a strong buy with a $52 price target, implying 20% upside. CGDV has outperformed the S&P 500, delivering a 96% total return over three years, driven by high-momentum value stock selection. The portfolio is heavily weighted toward technology, industrials, and healthcare, positioning CGDV to benefit from projected sector earnings growth in 2026.

CGDV is branded as the Capital Group's "Dividend Value" ETF, but a quick glance at its strategy, holdings, and fundamentals reveals that it's neither dividend- nor value-oriented. Still, that's not an issue for me. Even when comparing it with an appropriate peer like SPY, CGDV has delivered better total returns and risk-adjusted returns since its inception. Fundamentally, CGDV is grounded in strong next-year estimated earnings growth - 18%, which is about 5% more than even low-yielding large-cap value funds like VIG and DGRW.