I Examined More Than 100 U.S. Dividend ETFs. This One Delivers the Best Risk-Adjusted Returns.

1 hour ago 5

David Dierking, The Motley Fool

Tue, May 12, 2026 astatine 5:05 AM CDT 5 min read

Dividend stocks person enjoyed a spot of a renaissance this year. They're besides coming disconnected 3 years wherever they profoundly underperformed the S&P 500 (SNPINDEX: ^GSPC). Different stocks execute good successful antithetic environments, of course, but implicit returns aren't ever the measuring stick. What matters much is however overmuch instrumentality they're delivering per portion of hazard taken.

There are much than 100 U.S. dividend-focused exchange-traded funds (ETFs) successful the marketplace. Most way the returns of the Vanguard S&P 500 ETF (NYSEMKT: VOO) implicit the past fewer years, but galore are much competitory connected a risk-adjusted instrumentality basis. The 1 that stands retired supra each the others is the Capital Group Dividend Value ETF (NYSEMKT: CGDV). But with this money specifically, it's important to recognize wherefore it's done arsenic good arsenic it has. The reply is due to the fact that this isn't your accepted dividend ETF.

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A coin jar, folded up dollars, and a motion that says "dividends".

CGDV: The drivers of show

CGDV's Sharpe ratio of 1.67, which is simply a measurement of risk-adjusted returns, beats some the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) (0.96) and VOO (1.5) implicit the past 3 years. CGDV's show has been driven heavy by a immense tech overweight (30% of the portfolio) and positions successful stocks with minimal yields, specified arsenic Nvidia. That means the money looks thing similar the emblematic dividend ETF and overmuch much similar a growth-tilted broader marketplace portfolio. With a dividend output of 1.5%, CGDV isn't a meaningful income generator.

In its mandate, the money has the quality to put successful stocks "with the imaginable to wage dividends." Translation: This dividend ETF tin see non-dividend stocks. The Capital Group Dividend Value ETF has achieved its show due to the fact that it looks thing similar the emblematic dividend ETF that focuses connected dividend maturation oregon high-yield equities.

This is wide from the prospectus, which states that the money tin put successful companies that wage dividends oregon person the imaginable to wage dividends. In different words, paying a dividend isn't a prerequisite for inclusion successful the fund. It's besides actively managed. This gives it the quality to overweight high-conviction picks alternatively of remaining tethered to an index.

As a result, the managers person actively tilted the portfolio toward tech and maturation stocks. Microsoft, Nvidia, and Broadcom are the apical 3 holdings. Tech is 30% of the portfolio. Amazon, Uber, and Vertex Pharmaceuticals are successful the fund, and they don't adjacent wage a dividend.

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