DGRO: The Rotation Has Already Happened, Don't Chase It

Geneva Investor2.98K FollowersFollow5ShareSavePlay(11min)Comments(3)SummaryThe iShares Core Dividend Growth ETF no longer offers compelling value after recent rotation tailwinds into defensive stocks have, in my view, largely run their course.Continued outperformance for DGRO would depend on the Iran war continuing (but not escalating), AI decelerating (but not stopping), and a "SaaSpocalypse" scenario. I find these scenarios unlikely.DGRO's low yield (~2%) and exposure to growth sectors also make it a poor fit for income. Furthermore, it is a sub-par choice for investors willing to bet on macro trends.I rather recommend SCHD over DGRO for income seekers due to its higher yield (~3.34%) and focused dividend strategy.Holding DGRO is only sensible for those avoiding taxable events; new capital should avoid dividend funds entirely for higher returns. Don't get stuck in the wrong rotation. Alona Siniehina/iStock via Getty Images I have followed the iShares Core Dividend Growth ETF (DGRO) for some time, arguing how its low dividend yield makes it a poor fit for income-seeking investors. My point is that DGRO operates as a hybrid. It outperforms other This article was written byGeneva Investor2.98K FollowersFollowDecoding markets beyond P/E. As an investor, I either put my money into low cost funds or in single stocks that (I think) are asymmetric bets. My portfolio is roughly 50/50 between the two. I like to write about Macro and Fundamentals, with the (painful) awareness that Momentum and Sentiment are what really matters. That’s why I never try to time the market and I only buy stocks if I am willing to hold them for at least 10 years.When it comes to fundamentals, everybody knows the market is forward looking, but few understand what that means. I don’t look at a P/E number and decide to buy if a stock is “cheap”. I see markets as literally just the meeting point between demand and supply. Predicting human behavior is key.I always try to understand what the market is seeing in a stock beyond the numbers, which often implies trying to understand sectors, industries and long term growth trends. My approach requires ingenuity, curiosity and a good dose of naivete, as well as being comfortable in (sometimes) going against the current.I am based in Geneva, Switzerland (hence my SA name) and I have a Master’s Degree in Business. Friend "Rex Investing" is also a contributor to Seeking Alpha. All opinions and analysis are exclusively my own.You can follow me on Twitter @ x.com/GenevaInvestor. I am also on medium.com/@genevainvestor.Analyst’s Disclosure: I/we have a beneficial long position in the shares of SCHD, VOO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.