Capital Group Dividend Value ETF

CGDV

Market cap $34.9B

The Capital Group Dividend Value ETF (CGDV) has led the U.S. Dividend ETF category both in absolute and risk-adjusted returns. The active management that allows it to include non-dividend stocks makes it a very unconventional dividend ETF.

Since the 2019 ETF Rule, asset managers have flooded the market with active ETFs, offering investors a rapidly growing space of actively managed choices. In fact, over the last twelve months, active ETFs have seen outsized flows relative to their AUM — despite holding less in assets compared to their passive counterparts.

Capital Group Dividend Value ETF offers a compelling blend of growth and income, making it suitable as a long-term core holding. CGDV's differentiated, multi-manager, actively managed approach and higher technology exposure position it for potential outperformance versus passive peers. Despite a lower 1.25% yield, CGDV's distributions have grown steadily, and its strategy has delivered strong returns since inception, outperforming VOO in 2 of 3 years.

The ETF landscape is undergoing a structural shift as financial advisors increasingly pivot from pure passive indexing toward active management. While the ETF Rule of 2019 provided the regulatory spark, current market volatility and the quest for tax efficiency have accelerated active ETF adoption.

Capital Group Dividend Value ETF is rated a buy for retirees seeking total return and capital preservation under the 4% withdrawal rule. CGDV outperforms S&P 500 and growth ETFs by including both dividend payers and high-growth companies with the potential to initiate dividends. Active management, a 29% technology allocation, and flexible dividend criteria enable CGDV to capture AI-driven upside while limiting downside risk.

CGDV is a top-performing and actively-managed large-cap ETF with $31 billion in assets under management and a 0.33% expense ratio. Historical annual portfolio turnover rates for CGDV have been in the 25-30% range, but activity has picked up this year, and turnover is already at about 26% YTD. This article highlights the top overweighted and underweighted positions compared to the start of the year, and presents a comprehensive set of fundamentals alongside other ETFs like SPY and SCHD.

The market rotation into value and non-tech has opened the doors for bigger returns from dividend stocks. These three dividend ETFs all have higher tech exposure, which is what's driving analyst estimates at the moment.

Vanguard Total Stock Market ETF (NYSEARCA:VTI) holds roughly $2.1 trillion in assets and has earned its place in millions of retirement portfolios.

I am bullish on SCHG and CGDV ETFs for a blend of growth and income, despite near-term volatility from Middle East tensions. SCHG offers concentrated tech exposure, a low expense ratio (0.04%), and a strong long-term track record, benefiting from AI adoption. CGDV combines value investing with dividend income, uses a multi-manager active approach, and has outperformed VOO and SCHG since inception.

Dividend ETFs are back in focus, as investors look for stability and income amid persistent market volatility.