This Dividend ETF Beats the S&P 500 (With Less Volatility)
Most dividend funds are failing to keep up with the market. This one is winning. Here is the strategy you can use to capture growth while getting paid.
I’ve been on a pretty solid streak with my recent technology stock picks.
I’ve put out buy alerts on:
ASML Holdings ASML 0.00%↑ - Up ~57% since my buy alert.
Alphabet GOOG 0.00%↑ - Up over ~92% since my buy alert.
My latest two buys were issued on META 0.00%↑ and AMZN 0.00%↑ and now slightly up as well.
However, holding a bunch of individual companies may not fit your specific risk profile. Therefore, I wanted to cover an ETF that provides growing dividend income and has historically outperformed the S&P 500 since its inception.
As we can see below, this new ETF has outpaced the S&P 500 SPY 0.00%↑ with ease.
When I first started building my dividend portfolio, I made the classic mistake of loading up on the obvious blue chip dividend names and under allocating to technology. It worked for income, but it absolutely limited my total return.
This straightforward ETF fixes that problem by blending value, dividend growth, and selective exposure to some of the highest quality growth companies on the planet. Even better, it has shown real resilience in periods of uncertainty, which is why it has become a powerful anchor in low risk portfolios.
Before we break open its recent performance, let us take a deeper look at how the underlying strategy actually works.
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Fund Strategy
This ETF uses a focused, actively managed approach built around value, fundamental strength, and consistent rising income. Instead of trying to replicate an index, the portfolio concentrates on a smaller set of companies with strong balance sheets, durable cash flows, and pricing power.
Today we will be highlighting the Capital Group Dividend Value ETF CGDV 0.00%↑ and why it is an efficient, low risk, buy-and-hold fund for investors.
👉 The fund’s breakdown is as follows
Total positions: 52 different positions.
Expense ratio: 0.33%.
Primary focus: undervalued companies with above average fundamentals
Secondary focus: long term dividend growth potential
Regional allocation: primarily U.S. with light non U.S. exposure
Rebalancing: based on management’s view rather than a set schedule
Sector allocation leans heavily into durable cash generating businesses. A meaningful portion sits in technology, but not the speculative type. Think world class companies with recurring revenues and fortress balance sheets.
You are instantly getting exposure to some of the highest quality businesses in the world. The top holdings consist of companies like Nvidia NVDA 0.00%↑, Microsoft MSFT 0.00%↑, British American Tobacco BTI 0.00%↑, Starbucks SBUX 0.00%↑, just to name a few Eli Lilly LLY 0.00%↑, just to name a few.
On the holdings side, the strategy blends:
Iconic growth leaders
Dividend lifting compounders
Undervalued cash flow machines
A small percentage of international picks
Many dividend ETFs block themselves from owning companies unless they meet arbitrary payout histories. This ETF avoids that trap and focuses on future dividend potential instead of backward rules.
Performance and Comparison
This is where the fund’s strategy really shines.
CGDV’s strategy has resulted in the fund outperforming the S&P 500 since its inception.
CGDV’s strategy has also proven to be more resilient through market downturns. The latest example of this was demonstrated in early 2025, when the market tanked in response to Trump’s tariff announcements. While the S&P 500 saw a double-digit decline of more than 15%, CGDV only experienced a pullback of about 9%.
Without referencing outdated numbers, this strategy has consistently shown the ability to:
Participate in market rallies
Outperform traditional value ETFs
Limit drawdowns during volatility
Benefit from selective exposure to high quality growth
Peer ETFs that are worth comparing include:
Vanguard Value ETF VTV 0.00%↑
AAM S&P High Dividend Value ETF SPDV 0.00%↑
These peer funds serve similar purposes, but their broader structures often dilute performance. The ETF discussed here uses a more focused approach, which increases its potential for stronger long term results.
Risk Considerations
Every strength also creates a related risk, and this fund is no exception.
Because of its concentrated approach, the top ten holdings make up a significant share of assets. Many of these companies are tied to technology or innovation. While these names have been strong contributors, a meaningful pullback in tech would likely weigh on the fund’s performance.
Another factor is its relatively short operating history. It has not lived through multiple full market cycles, which means some risks remain untested in prolonged downturns or recessions.
Dividend Growth Outlook
Although the current yield is modest, the real appeal is the potential for dividend growth over time. The fund’s annual payouts have been rising steadily since inception. The only caveat is that the starting dividend yield is really low at 1.27%.
With a disciplined value approach and exposure to cash rich growth companies, the fund is positioned to lift its distributions for years to come. Long term holders will likely enjoy an increasing yield on cost as payouts compound.
Because the ETF structure passes through qualified dividends, the income tends to be more tax efficient compared to high yield alternatives that rely heavily on non qualified distributions.
So while this ETF may not contribute much in terms of dividend income, CGDV can reward you with dividend raises when you hold for an extended period of time.
Takeaway
This strategy continues to impress for several reasons:
Exposure to high quality value and growth companies
Rising dividend income over time
A focused but disciplined structure
Strong relative performance against peers
Better resilience during volatility
It is a compelling buy and hold ETF for investors seeking stability, dividend growth, and long term appreciation without needing to chase AI narratives or speculative trends.
Now let us unlock the actual fund name, updated performance charts, and the complete comparison data.