Capital Group Dividend Value ETF (CGDV): Beating the s p500 With Growth and Income

The world of ETFs has no shortage of funds promising to deliver strong returns. But very few can claim to have consistently outpaced the s p500—the gold standard for U.S. equities. The Capital Group Dividend Value ETF (CGDV) has done exactly that, combining dividend-paying stability with growth-oriented upside. For investors seeking a smart balance of income and capital appreciation, CGDV is quickly becoming a go-to choice.

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What Makes CGDV Unique?

Unlike traditional passive dividend ETFs, CGDV is actively managed by Capital Group, a firm with nearly a century of investing expertise. Its philosophy blends:

• Dividend strength: Targeting stocks that offer yields about 25–30% higher than the average s p500 company.
• Growth potential: Including high-quality growth names (like Nvidia or Microsoft) alongside value-oriented stalwarts.
• Experienced managers: Multi-manager sleeves led by veterans with decades of track records.

This hybrid approach gives CGDV the ability to perform well in both rising growth markets and defensive value cycles.

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Performance: Numbers That Tell the Story

Performance is where CGDV truly shines. Since inception in 2022, the ETF has outpaced the s p500 by roughly 70% cumulatively. Even in shorter timeframes, it shows an impressive track record.

CGDV vs s p500 Returns

(Annualized performance comparison)

• Since inception: CGDV ~22% vs s p500 ~17%
• 3-Year Annualized: CGDV ~21.5% vs s p500 ~18.5%
• 1-Year Return: CGDV ~22.7% vs s p500 ~22.4%

CGDV doesn’t just keep up—it often outpaces its benchmark while offering a more defensive yield component.

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Yield, Fees, and Comparisons

Here’s a quick snapshot comparing CGDV with the broader s p500 (via SPY ETF):

📊 CGDV vs s p500 Comparison Table
(See the interactive table above)

• Expense Ratio: CGDV at 0.33% is higher than SPY’s 0.09%, but still lower than many actively managed ETFs.
• Dividend Yield: CGDV ~1.6%, about 25% higher than the s p500 average (~1.25%).
• Top Holdings: CGDV leans on Microsoft, Nvidia, Broadcom, Eli Lilly—blending growth with value.
• Tax Efficiency: Like SPY, CGDV benefits from ETF tax advantages, helping shield investors from capital gains distributions.

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Portfolio Composition & Strategy

CGDV holds roughly 90–93% U.S. large-cap stocks with a small international sleeve. Its sector mix is diversified across:

• Technology: Nvidia, Microsoft, Broadcom
• Healthcare: Eli Lilly
• Industrial & Defense: RTX, GE
• Consumer Discretionary: Starbucks, Las Vegas Sands

While marketed as a dividend ETF, CGDV is flexible enough to hold companies like Alphabet or Meta that may not fit traditional dividend molds but bring growth exposure.

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Investor Risk Profiles: Who Should Consider CGDV?

Every ETF has a risk-return personality. Here’s where CGDV fits:

• Conservative Investors: ✔ Beneficial for those who want exposure to equities with the cushion of dividends. The yield isn’t sky-high, but it helps soften volatility.
• Growth-Oriented Investors: ✔ Attractive because CGDV isn’t a stodgy dividend-only fund—it invests in growth engines like Nvidia and Microsoft.
• Income-Only Investors: ✘ Probably not ideal for retirees or those seeking 4–5%+ income. Its 1.6% yield is better than the s p500 average but not high-yield territory.
• Tax-Sensitive Investors: ✔ Strong choice for taxable accounts since the ETF structure minimizes capital gains distributions despite high turnover.

In short: CGDV is best for investors who want balanced exposure—growth plus a yield premium, all with lower volatility than pure growth funds.

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Why CGDV Looks Compelling Now

1. AI and Tech Tailwinds: Nvidia and Broadcom exposure has already boosted results, and AI remains a secular growth driver.
2. Dividend Discipline: Offers resilience during market downturns while keeping upside open.
3. Proven Managers: Capital Group’s multi-sleeve structure reduces concentration risk and adds flexibility.
4. Beating the Benchmark: Outperformance against the s p500 validates its hybrid approach.

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Final Thoughts

The Capital Group Dividend Value ETF (CGDV) has quickly become one of the most attractive active ETFs available today. Its ability to blend growth-driven names with dividend resilience makes it a unique solution in a crowded ETF landscape. While its yield may not satisfy pure income seekers, for most long-term investors looking to outperform the s p500 with balance and tax efficiency, CGDV is a standout option.