What is DGRO and how does it differ from SCHD?

DGRO (iShares Core Dividend Growth ETF) tracks the Morningstar U.S. Dividend Growth Index and holds approximately 400–500 stocks with 5+ year dividend history and financial capacity to keep growing dividends. SCHD holds ~100 stocks that pass a stricter four-factor quality screen with a 10-year minimum. DGRO includes more tech exposure (Apple, Microsoft), while SCHD skews toward traditional dividend sectors.

What is DGRO's dividend yield?

As of 2026, DGRO's trailing dividend yield is approximately 2–2.5%, lower than SCHD (3.5–4%). The lower yield reflects heavier tech exposure — companies like Apple and Microsoft pay small but growing dividends. DGRO's strength is dividend growth rate and total return potential, not maximum current income.

Does DGRO hold tech stocks like Apple and Microsoft?

Yes. This is DGRO's most distinctive feature compared to SCHD. Apple and Microsoft are typically among DGRO's top holdings because they meet the 5-year dividend growth requirement and have strong financial capacity to continue. SCHD's stricter yield and quality screen often results in lower or zero weight for these mega-cap tech names.

Is DGRO better than SCHD?

Neither is universally better — they have different philosophies. SCHD optimizes for a blend of current yield, quality, and dividend growth, with a stricter financial screen. DGRO optimizes for dividend growth sustainability across a broader universe including tech. DGRO's total return has sometimes exceeded SCHD's in tech-driven bull markets. SCHD typically wins on current income.

Where should I hold DGRO — Roth IRA or taxable?

Roth IRA is ideal. DGRO's dividends are primarily qualified dividends (taxed at 0/15/20% in taxable accounts), making it relatively tax-efficient compared to JEPI. But eliminating even qualified dividend tax drag in a Roth IRA improves compounding over decades.

How many stocks does DGRO hold?

DGRO typically holds around 400–500 stocks, significantly more than SCHD (~100) or NOBL (~65–70). This broader diversification reduces individual stock and sector concentration risk, but it also means DGRO more closely resembles the broader market in behavior.

DGRO 2026: iShares Dividend Growth ETF

DGRO (iShares Core Dividend Growth ETF) is BlackRock’s answer to the dividend growth space — broader, more tech-inclusive, and with a different quality filter than SCHD. While SCHD has become the household name in dividend growth ETFs, DGRO deserves equal consideration for investors who want exposure to dividend-growing companies across the full US equity spectrum, including the technology sector.

As of 2026, DGRO holds approximately 400–500 stocks with an expense ratio of just 0.08%. That makes it one of the most cost-effective diversified dividend growth options available.

Quick Summary: DGRO at a Glance

Feature	Details
Issuer	BlackRock (iShares)
Index	Morningstar U.S. Dividend Growth Index
Expense ratio	0.08%
Number of holdings	~400–500
Dividend frequency	Quarterly
Approximate yield (2026)	~2–2.5%
Dividend growth (historical)	~9–11% annually
Inception	June 2014

The 0.08% expense ratio is slightly above SCHD (0.06%) but far below NOBL (0.35%). For a fund with 400+ holdings and meaningful tech exposure, 0.08% is an exceptionally low cost.

Holdings & Methodology: What Makes DGRO Different

The Morningstar Dividend Growth Index Screen

DGRO tracks the Morningstar U.S. Dividend Growth Index, which applies the following screens to the US equity universe:

Minimum 5 consecutive years of dividend payments (lower bar than SCHD’s 10 years)
Financial capacity to sustain dividend growth — Morningstar analysts evaluate whether companies can maintain and grow dividends going forward
Payout ratio below 75% — excludes companies paying out more than three-quarters of earnings as dividends (a sign of potential unsustainability)
Minimum market capitalization and liquidity thresholds

The payout ratio screen is particularly important. It filters out companies that may have high current yields but are stretched — paying dividends they cannot sustain long-term.

The Tech Difference: DGRO vs SCHD

This is where DGRO most clearly separates itself from SCHD.

SCHD’s index includes a dividend yield component in its four-factor screen. Companies like Apple and Microsoft have relatively modest dividend yields (around 0.5–1%), which typically causes them to score lower in SCHD’s selection model, resulting in low or negligible weighting.

DGRO’s Morningstar index does not penalize companies for lower yields as long as they are growing dividends and have the financial capacity to continue. As a result:

Apple (AAPL) typically appears as a top DGRO holding
Microsoft (MSFT) typically appears in the top holdings
Broadcom (AVGO), JPMorgan (JPM), ExxonMobil (XOM), and Johnson & Johnson (JNJ) are also common

This creates a more S&P 500-like profile with a dividend-growth overlay — distinct from the traditional-sector-heavy composition of SCHD or NOBL.

Sector Allocation

DGRO’s sector weights more closely resemble the S&P 500 than SCHD does. Technology carries a meaningful weight (often 15–25%), while Financials, Healthcare, Industrials, and Consumer Staples fill out the remaining allocation.

This balanced sector exposure means DGRO does not lag as sharply in tech-led bull markets as SCHD might.

Dividend Yield vs. Growth: DGRO’s Value Proposition

Lower Current Yield, Higher Growth Potential

DGRO’s ~2–2.5% yield is below SCHD’s ~3.5–4%. For income-focused investors who want cash flow today, this is a genuine shortcoming. But the lower yield comes with two compensations:

Stronger price appreciation potential — tech-inclusive holdings benefit from growth sector tailwinds
Competitive dividend growth rate — historically around 9–11% annually, comparable to SCHD’s 11–12%

Over a long investment horizon, DGRO’s dividend growth trajectory means the starting yield difference narrows substantially.

Total Return Comparison

When measured on pure total return (price appreciation + dividends reinvested), DGRO has competed closely with SCHD over most periods since its 2014 inception. In years of strong tech performance (2023, parts of 2024), DGRO’s tech inclusion allowed it to keep pace with or exceed SCHD.

In high-rate environments where dividend stocks face headwinds, DGRO’s more growth-oriented tilt can also be a modest advantage, since markets may still bid up earnings-driven tech companies even when pure yield plays fall out of favor.

DGRO vs Other Dividend ETFs: The Full Comparison

ETF	Expense Ratio	Approx. Yield	Tech Weight	Holdings	Key Filter
DGRO	0.08%	~2–2.5%	High	~400–500	5 yr + payout ratio <75%
SCHD	0.06%	~3.5–4%	Low	~100	10 yr + 4-factor quality
VYM	0.06%	~3–3.5%	Moderate	~440	Yield screen, no min. growth
NOBL	0.35%	~2–2.5%	Low	~65–70	25 yr consecutive increases

DGRO sits closest to SCHD in philosophy (dividend growth orientation) but diverges significantly in sector composition and portfolio breadth.

For investors already familiar with SCHD’s approach, DGRO represents a genuine complement rather than a substitute.

DGRO + SCHD: The Combination Strategy

Many investors hold both DGRO and SCHD together, recognizing that the two funds complement each other:

SCHD provides: higher current yield, stricter quality screen, lower tech exposure, traditional dividend sector weighting
DGRO provides: broader tech exposure, lower payout ratios, more holdings for diversification, competitive dividend growth

A 50/50 DGRO/SCHD split blends these characteristics. The combined portfolio gets more tech exposure than SCHD alone while maintaining higher income than DGRO alone.

For comparison across the full dividend ETF spectrum, see VYM vs SCHD.

US Investor Practical Guide

Account Placement

Like SCHD and VYM, DGRO’s dividends are primarily qualified dividends — taxed at preferential rates in a taxable account. Roth IRA is still the optimal location for maximum long-term compounding.

Roth IRA: dividends compound tax-free; ideal for a 20+ year horizon
Taxable brokerage: qualified dividends at 0/15/20% rates — reasonable efficiency
Traditional 401(k): tax-deferred growth; check whether your plan menu includes DGRO

Broker Access

DGRO is available commission-free at:

Fidelity
Charles Schwab
Vanguard brokerage
Robinhood, Webull (fractional shares available)

Dollar-Cost Averaging

DGRO’s quarterly dividend schedule and steady long-term growth make it well-suited for a monthly DCA strategy. Most brokers support automatic investment into ETFs. Set an amount, pick a frequency, and let time work in your favor.

DRIP

Dividend reinvestment is available at most brokers. Reinvesting DGRO’s quarterly dividends back into shares accelerates compounding — particularly powerful over 15–20 year horizons given the fund’s ~9–11% historical dividend growth rate.

DGRO in Different Market Scenarios

Tech bull market: DGRO benefits from Apple and Microsoft price appreciation, outpacing SCHD and NOBL
Rising rate environment: Mixed impact; dividend growth stocks are more resilient than pure-yield plays, and tech can still perform on earnings
Recession / bear market: Payout ratio screen helps — companies paying <75% of earnings have more cushion to maintain dividends; DGRO should show smaller dividend cuts than higher-yield alternatives
Flat/sideways market: Dividend growth compounds quietly; total return may lag pure growth indices but lead pure yield ETFs

For a comprehensive view of dividend investing strategy across global markets, see our global dividend stocks guide.