The fund generally invests at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics, substantially identical to the component securities of its underlying index. The underlying index is a subset of the Morningstar U.S. Market IndexSM, which is a broad market index that represents approximately 97% of the market capitalization of publicly traded U.S. stocks.

The basic requirements are for companies to have five years of consecutive dividend growth, payout ratios less than 75%, and a positive consensus earnings forecast. Notably, the Index avoids potential yield traps by excluding the top 10% of companies by dividend yield.

DGRO has gained an annual CAGR 11% since its inception date in June 2014, outperforming both the Vanguard Dividend Appreciation ETF (VIG) and SPY by 0.70% and 0.83% per year, respectively, with comparable volatility.

DGRO's Index had undergone econstitution effective December 16. The big additions this time around were Exxon (XOM – back to the Dow Jones as well) and Chevron (CVX), now representing a combined 5.70% of the portfolio. With higher oil prices, DGRO is now more competitive from a growth perspective.

AbbVie (ABBV) also qualifies after solid recovery this year, previously failing the "extreme dividend yield" screen used to eliminate yield traps. The Index removed 19 holdings primarily because of the extreme dividend yield screen. The deletion of potential yield traps like 3M (MMM) and Intel (INTC) also increased DGRO’s investment quality.

As a result, DGRO obtained respective exposures into the following sectors: healthcare – 19%, IT – 17.5%, financials – 17.4%, industrials – 11% and other sectors.

Exxon Mobil now leads the fund with a 3.10% weighting, followed by Johnson & Johnson (JNJ) and JPMorgan Chase (JPM). These holdings total 26.58% compared to 24.40% for the SPDR S&P 500 Trust ETF (SPY).