5 Dividend Aristocrats ETFs – Choose wisely! An honest review [2021]

In this article I’m sharing with you my review of the most popular Dividend Aristocrats ETF s.

Spoiler alert: Not all is as it seems when looking only at the title of the individual European Dividend Aristocrats ETFs.

As most of you know, I focus a lot on individual stocks on this blog.

But that doesn’t mean that there aren’t any good or even better alternatives.

One of the investment options that I have been researching lately is to find if there are any Dividend Aristocrat ETFs that I would like to own.

Just don’t be fooled by it, because as you will see in this review: only some ETFs are actually growing their dividend year-over-year.

This is the exact reason why I am going to share with you my review of the Dividend Aristocrat ETFs that seem to be most popular in the investors world.

As part of my review I have decided to focus on the following main aspects:

  • Dividend Yield
  • Index Composition
  • Accessibility (can we easily buy it in Europe)
  • Valuation (simplified)
  • Management fees

But most and for all: can I count on the ETF paying out growing dividends over time?

That’s really what the core of my strategy is and what I’m ultimately looking for as an Dividend Growth Investor.

Therefore, and without further ado, hereby my review of the following Dividend Aristocrat ETF’s:

Table of Content:

Disclaimer
All data presented in this post is from 24-Feb-2021. Therefore information upon reading this post may differ from when the post was written. Nevertheless, I believe that the content will be still valid in 6 months after the publication date.


S&P 500 Dividend Aristocrats ETF

Rating: 3.5 out of 5.

Ticker: NOBL
ISIN: US74348A4673
Distributions: Quarterly
Dividend Yield: 2,08%

Expense Ratio: 0,35%
P/E: 22.20
NAV: 81.98 USD
ETF provider: ProShares

Ths S&P dividend aristocrats index exists since 2013 and it is a composition of at least 40 US companies that have increased their dividends for at least the last 25 years.

It is an equally weighted Dividend Aristocrats ETF and it limits its exposure to any sector to no more than 30%. This is visible in their top 10 holdings because it covers together 17.26% of the portfolio. There’s no position over 2% and there’s no position under 1%. I consider this as pretty well diversified index.

The ETF is trading at with a dividend yield of 2,08%. I find this a relatively low yield compared to other ETF’s and their Expense ratio is 0,35%

This is an ETF, so their quarterly payouts are fluctuating, but it’s good to see that the overall trend line is up. The total dividend from 2020 was $1.70, which meant an increase of 19% compared to 2019 ($1,43). This is an impressive increase during one of the worst years in the last decade. These are dividend aristocrats.

S&P 500 Dividend Aristocrats ETF - Dividend growth
Quarterly dividend payments since inception in Q4 2013

I also like to have a quick look at their top 3 holdings. It’s no exact science, but it does give me a bit of a feeling about the composition of the ETF. It’s a snapshot and it can change overnight, but their current top 3 holdings are:

  • People’s United Financial
  • Federal Reality Investment Trust
  • Exxon Mobil Corporation

While this ETF has several benefits, it might actually be hard for you to purchase it via your broker over here in Europe. I have tried to look it up with both deGiro and Binck NV. Unfortunately the ETF was not available for purchasing at both brokers.

Pro

✅ A trend of growing dividends
✅ Expense Ratio
✅ Diversification
✅ Companies with 25+ years dividend growth

Con

⭕ Accessibility to purchase
⭕ Flat dividend compared to 2018
⭕ Relatively low dividend yield

More info: S&P 500 DIVIDEND ARISTOCRATS ETF


MSCI Europe Dividend Growers ETF

Rating: 1 out of 5.

Ticker: BATS:EUDV
ISIN: US74347B5407
Distributions: Quarterly
Dividend Yield: 1,27%

Expense Ratio: 0,56%
P/E: 24,34
NAV: 46,48 USD
ETF provider: ProShares

The MSCI Europe Dividend Growers ETF exists since 2015 and is the EU equivalent of the before-mentioned Dividend Aristocrats ETF. The index is a composition of at least 25 European companies that have increased their dividends for at least 10 years. This means that these companies haven’t necessarily proven to have resilience during a recession as the Great Recession was 12 years ago.

This is also an equally weighted ETF and it limits its exposure to any sector to no more than 30%. There’s no position over 3,5% and there’s no position under 1,8%. It is a smaller ETF compares to the US equivalent, because it “only” consists of 44 holdings. I consider this again to be a very well diversified index.

The ETF is currently trading at an average Price to Earnings of ~24 and it currently yields 1,27%. The Trailing Twelve Months dividend is much lower than other years due to the significant decline in dividends payed-out back in May last year. The performance of the index overall has been very poor. It didn’t really go anywhere since its inception in 2015.

The same applies to its dividend history. As per the below graph, the trend line has been effectively flat. This is really interesting, because the ETF name suggests to buyers that you may expect to see a growing dividend.

Their top 3 holdings are currently:

  • ASML Holding NV
  • Ashtead Group Plc
  • Partners Group Holding AG

I don’t see a lot of benefits in owning this ETF. While it is an ETF focused on European companies, it seems to be only available in USD. I have also tried to look this one up at both deGiro and Binck NV and fortunately this ETF wasn’t available for purchasing at both brokers.

For me this ETF is a perfect example of why you should do your own homework. Morningstar gives it a 4-star rating and this is to many people an indicator that it is “buy-worthy”.

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

Pro

✅ Diversification

Con

⭕ Accessibility to purchase
⭕ No annual dividend growth since inception
⭕ Relatively low dividend yield
⭕ ETF NAV same level as 2015
⭕ Index composed on 10 year dividend growth. Excludes Great Recession
⭕ Trailing Euro Stoxx 50 index by 8%

More info: MSCI Europe Dividend Growers ETF


There are more dividend growth related ETF’s from ProShares, but it would become a very lengthy blog post to discuss them all. However, have a look at the below overview if you are interested in some of their other ETF’s.

ProShares available Dividends Aristocrats ETF s
source: www.proshares.com

SPDR S&P Dividend ETF

Rating: 3 out of 5.

Ticker: SDY / SPYD
ISIN: US78464A7634 / IE00B6YX5D40
Distributions: Quarterly
Dividend Yield: 2,64%

Expense Ratio: 0,35%
P/E: 17,74
NAV: $114,29
ETF Provider: SSGA Funds Management, Inc.

The SPDR S&P Dividend ETF exists since 2005 and it is a composition of US companies that have increased their dividends for at least 20 years. The ETF seeks to also focus on companies that offer both capital growth and dividend income instead of pure yield plays.

The index currently consists of 118 companies and their biggest sector is Financials (~18%) while their smallest sector is Information Technology (3%). Their top 10 positions in the portfolio cover together 22,4% of the total index. In my opinion the ETF/Index could improve on it’s sector diversification and I would prefer to see more allocation towards the Information Technology, Consumer Staples and the Health Care sector (currently 13,78% and 5,74% respectively).

The ETF is trading at an average Price to Earnings of ~18 and currently yields 2,64% based on trailing twelve months (TTM) distributions. I find this yield quite good compared to other ETF’s and given the current zero-interest environment.

The dividend growth history is not that strong. Only the last two years saw an uptick in dividend growth, because the decade before saw a range bound dividend payout. The total dividend from 2020 was $3,02, which meant a dividend growth of 14,4% compared to 2018 ($2,64). I treat last year as an outlier as can be observed in the trend line.

SPDR S&P Dividend ETF dividend history

Besides the dividend distributions, the ETF also paid several times a capital gain distribution between 2013 and 2017. I don’t count them as dividends for comparison reasons.

From a price appreciation the story looks much different. As per the below graph, the ETF has seen steady price appreciation since the Great Recession until the stock market crash related to the pandemic.

However, it has been trailing the S&P500 by ~100% since the Great Recession in 2007.

Having said that, the top 3 holdings in the ETF are currently:

  • Exxon Mobil Corporation
  • People’s United Financial Inc.
  • AT&T

The good news is that you can buy this ETF via both deGiro and Binck, but under ticker symbol $SPYD (ISIN: IE00B6YX5D40) instead of ticker symbol $SDY. It’s the same ETF, but made available in Euros and it is accessible in most European countries.

Pro

✅ Accessibility to purchase in Europe
✅ Steady capital appreciation
✅ Expense ratio
✅ Dividend yield
✅ Companies -> 20+ years dividend growth

Con

⭕ Poorly diversified
⭕ No real dividend growth from ETF
⭕ Trailing S&P 500 by wide margin

More Info: SPDR S&P Dividend ETF


SPDR® S&P Euro Dividend Aristocrats UCITS ETF (EUR)

Rating: 3 out of 5.

Ticker: SPYW / EUDV
ISIN: IE00B5M1WJ87
Distributions: Bi-Annually
Dividend Yield: 3,04%

Expense Ratio: 0,30%
P/E: 16,74
NAV: 21,08 Euro
ETF Provider: SSGA Funds Management, Inc

The SPDR S&P Euro Dividend Aristocrats ETF exists since 2012 and it is a composition of 40 highest-yielding European dividend paying companies that have increased or maintained their dividends for at least 10 years.

The index currently consists of 39 companies and their biggest sectors are Utilities (19,7%) and Financials (17,3%) while their smallest sector is Information Technology (2,6%). Their top 10 positions in the portfolio cover together 45% of the total index. In my opinion this ETF/Index could also improve on it’s sector diversification and I would prefer to see more allocation towards the Information Technology, Consumer Staples and the Health Care sector (currently 2,6%, 9,13% and 12,08% respectively).

The ETF yields 3,04% based on trailing twelve months (TTM) distributions which is high compared to the other ETF’s listed in this blog post.

The dividend growth history is not that strong. The ETF distributes currently less in annual dividends compared to 2013. As you can see in below graph, the dividend distributions are relatively flat with minor ups and downs during the years.

SPDR Euro Dividend Aristocrats ETF dividend history

The ETF grew approximately 40% since since inception (2012) until now from a price appreciation point of view. This is definitely not a lot if we take into consideration that we experienced one of the longest bull-markets in history (US perspective).

But to be fair, this is an ETF with European stocks and it outperformed the Euro Stoxx 50 index with ~6%.

Having said that, the top 3 holdings in the ETF are currently:

  • Fortum Oyj
  • Total SE
  • Allianz SE

This ETF is also easily purchased via deGiro. Just be careful though, you can purchase it on different stock exchanges in Europe. I would recommend to go to a stock exchange in a country with the most favorable tax rate that applies to you. Either based on the direct tax rate or on the treaty to avoid double taxation your country may have with the other country.

Pro

✅ High Dividend yield
✅ Accessibility to purchase in Europe
✅ Expense ratio
✅ Beats Euro Stoxx 50 on capital appreciation

Con

⭕ Poorly diversified
⭕ No real dividend growth from ETF
⭕ Index composed on 10 year dividend growth. Excludes Great Recession

More Info: SPDR® S&P Euro Dividend Aristocrats UCITS ETF


Vanguard Dividend Appreciation ETF

Rating: 4.5 out of 5.

Ticker: VIG
ISIN: US9219088443
Distributions: Quarterly
Dividend Yield: 1,6%

Expense Ratio: 0,06%
P/E:
NAV: 142.64
ETF Provider: Vanguard

The Vanguard Dividend Appreciation ETF exists since April 2006 and it tracks the Nasdaq US dividend achievers select index. The index focuses on US stocks that have increased their dividends for at least 10 years.

The index currently consists of 212 companies and their biggest sector is Consumer Services (22,8%) followed by Industrials (20,10%) and Healthcare (15.4%). Their smallest sectors are Telecommunications (3%) and Basic Materials (2,8%). This is actually one of the few ETF’s in this review that has a decent allocation to the Technology sector with 13%.

Their top 10 positions in the portfolio cover together 35% of the total ETF. In my opinion this ETF/Index has a very good sector diversification. I am totally fine with this diversification and aligns quite a bit with my personal allocation strategy. We generally have strong sectors with a higher allocation compared to the slower growth sectors.

The ETF yields “just” 1,6% based on trailing twelve months (TTM) distributions which is on the low end compared to the other ETF’s listed in this blog post. I believe that this is due to the relatively high valuations (P/E ratios) from many of their major positions.

Where this ETF shines is really the dividend growth history. The ETF has a strong dividend growth track record. While it might not have grown the annual dividend every single year, the biggest dividend “cut” was 4.58% in 2009. This was at the depth of the Great Recession which is quite understandable. The year after the dividend distributions grew again with 7.05%.

As you can see in below graph, the dividend distributions have almost tripled since its inception in 2006 and the 10 year growth rate spots 7.37%

Dividend Aristocrats ETF dividend growth $VIG

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This ETF has not only performed well from a dividend growth point of view. It also saw a lot of price appreciation in lock-step with the S&P 500. The below graph from Vanguard’s website provides a very good overview of the performance since 2010 in which it has also tripled it’s net asset value.

Having said that, the ETF’s top 3 largest holdings are:

  • Microsoft
  • Walmart
  • Johnson & Johnson

I mean, do I need to say more? These are 3 top-notch companies that deserve a place in every dividend portfolio!

Unfortunately though, this ETF is not easy to purchase for European investors. Vanguard is accessible by investors from certain European countries, but it’s really limited for personal investors to directly purchase via them.

Via deGiro it is neither possible for most Europeans to buy the ETF. The good thing is that some of the other brokers do provide access to this ETF due to its popularity and Binck NV is an example of that.

Pro

✅ Super low expense ratio
✅ Strong 10-yr avg and reliable dividend growth
✅ Good sector diversification
✅ Strong price appreciation, in line with SP500

Con

⭕ Low Dividend yield / High valuation
⭕ Some accessibility issues to purchase in Europe
⭕ Index composed on 10 year dividend growth. Excludes Great Recession

More info: Vanguard Dividend Appreciation ETF


iShares Core Dividend Growth ETF

Rating: 3.5 out of 5.

Ticker: DGRO
ISIN: US46434V6213
Distributions: Quarterly
Dividend Yield: 2.21%

Expense Ratio: 0,08%
P/E: 22,93
NAV: 46,12
ETF Provider: iShares

I decided to include this ETF because I know that many people think that this is a dividend aristocrats ETF, just due to the term “dividend growth” in its name. This is not true though. iShares is not clear at all in their fact-sheet about their strategy regarding dividend growth. All other ETF’s were quite clear about this from the get-go, so I actually believe that they are purposely vague!

iShares mentions the following on their website as an investment objective:

“…ETF seeks to track the investment results of an index composed of U.S. equities with a history of consistently growing dividends

You have to dig a bit deeper in their prospectus though and then you will read that it seeks to track the Morningstar® US Dividend Growth Index. Reading even a bit further again will finally mention that the index screens for a minimum of five years of uninterrupted annual dividend growth and a payout ratio under 75%

This is the reason why I don’t consider this a Dividend Aristocrats ETF. 5 years of consecutive dividend growth is just too little. Anyway, now that we’re at it, let’s look at the ETF a bit deeper to check if could belong in my portfolio 😉


The iShares Core Dividend Growth ETF exists since June 2014 and it is a composition of 396 US based companies. It is by far the largest list of companies in a single ETF as part of this review.

The biggest sectors are Financials (20%), Information Technology (20%) and Health Care (16%) while their smallest sector is Real Estate (0%). Their top 10 positions in the portfolio cover together 25,7% of the total index. In my opinion this ETF/Index is pretty well diversified in some of the better performing sectors, but I would’ve liked to see more exposure to Real Estate. This is probably due to the 75% payout ratio requirement as most REIT’s are required by law to distribute 80% of their earnings.

The ETF yields 2,21% based on trailing twelve months (TTM) distributions which is average compared to the other ETF’s listed in this blog post.

The dividend growth history is actually pretty good so far, but we need to remember that this was in one of the biggest bull markets in modern history. Having said that, the dividend distributions grew with an average of 11% in the last 5 years. The dividend kept growing during the covid-19 pandemic which was something I didn’t expect.

Dividend Aristocrats ETF dividend growth

This ETF has not only performed relatively well from a dividend growth point of view. It saw price appreciation in lock-step with the S&P 500, which is no surprise if it is almost the size of the whole S&P 500. The below graph from iShares website provides a very good overview of the performance since 2014 in which it almost doubled its value.

Having said that, the ETF’s top 3 largest holdings are:

  • JP Morgan Chase & Co
  • Microsoft
  • Apple

Together they cover almost 10% of the whole ETF which is quite a lot considering a total of ~400 ETF holdings. Having said that, these are three brilliant companies and I hold to of them in my personal portfolio as Tier-1 stocks. I’m actually sure that they’ll still be growing their dividends a decade from now.

Unfortunately though, this ETF is not easy to purchase for European investors. I haven’t found it to be available via several of the European iShares sites and neither via deGiro and Binck NV. If you know of brokers that sell this ETF, then please let me know in the comments 👇.

Pro

✅ Very low expense ratio
✅ Strong 5-yr avg and reliable dividend growth
✅ Reasonable sector diversification
✅ Good price appreciation, in line with SP500

Con

⭕ Relatively low Dividend yield / High valuation
⭕ I can’t purchase it from within Europe
⭕ Index composed on just 5 year dividend growth.

More info: iShares Core Dividend Growth ETF


And the best Dividend Aristocrats ETF is…

🏆 Vanguard Dividend Appreciation ETF 🏆

Quality comes at a price, because the starting yield is relatively low. But oh boy, if there’s one ETF that I could ever own in my portfolio then it would definitely be this one.

The track record is suburb and I really like their sector allocation!

Final Thoughts & Conclusion

1️⃣ None of the Dividend Aristocrats ETFs has shown pure year-over-year dividend growth. This was quite a surprise to me, but from the other end it does make sense. A large portfolio is also subject to an overall decline in dividend payments.

2️⃣ Fun Fact: the best performing ETF’s ($VIG & $DGRO) have the lowest management fees 💪

3️⃣ US aristocrats ETF’s perform better than their European equivalents, but you do get a lower starting yield. If you are in it for the compounding effect then you might be better off with the (EUROPEAN) because the price was relatively stable. If you are seeking price appreciation, then you might just be better of with the US equivalent

4️⃣ Regarding my own portfolio: $VIG and $DGRO have outperformed me from a price-appreciation point of view. However, not from a Dividend Income point of view. I’m not sure how the performance comparison would look like when taking reinvested dividends into account.

5️⃣ I keep having a preference for individual stock picking. ETF’s are designed to have many companies in there, unrelated to their valuation and future prospects. Therefore there are many stocks in an Dividend Aristocrats ETF which keep the performances of indexes down and which we would likely never own as individual investors. Especially not when using a combination of dividend growth investing and value investing.

Disclosure

I have not reviewed other Dividend Aristocrats ETF’s like the Vanguard International Dividend Appreciation ETF. The reason for that is to keep the size of this post consumable and at the same time this ETF only exists since 2016. This is not that long compared to some of the others. The same reasoning applies to iShares International Dividend Growth ETF and Cboe Vest S&P 500® Dividend Aristocrats Target Income ETF.

I do not own any of these ETF’s. I am currently neither considering to purchase any of these.


I hope that you found this review helpful!

I definitely got a better understanding of the value of these ETF’s, so I learnt quite a lot by analyzing that. It also reconfirms to me that I have a preference for individual stock picking. Just out of passion and just out of the value it creates for me.

Yours Truly,

European Dividend Growth Investor

Disclaimer

I’m not a certified financial planner/advisor nor a certified financial analyst nor an economist nor a CPA nor an accountant nor a lawyer. I’m not a finance professional through formal education. I’m a person who believes and takes pride in a sense of freedom, satisfaction, fulfillment and empowerment that I get from being financially competent and being conscious managing my personal money. The contents on this blog are for informational and entertainment purposes only and does not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my blog is appropriate for you or anyone else. By reading this blog, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information provided on this blog.

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engodel
engodel
1 year ago

good article again buddy and it highlights one of the many frustrations for European investors. The good and cheap US funds are just to hard to access over here for the retail investor. From a US citizen stand point there is a valid argument that and ETF based strategy should be the main strategy for the average retail investor. For a European citizen the argument is a little more muddy. Tax laws in each country cannot be discounted either as they vary quite vastly. I am also a little surprised with the returns on some you these funds and the… Read more »

Ivan
Ivan
1 year ago

Great article.
Unfortunately from all these ETFs I can invest in SPYD only which is with dividend yield of 1.1%

Jan
Jan
1 year ago

Oh, I just found this ETF: Vanguard International Dividend Appreciation ETF (VIGI). Quite an European angle ETF: 23.20% Emerging Markets, 51.30% Europe, 18.30% Pacific, 0.10% Middle East, 5.60% North America, 1.50% Other. Thank you for a great article! Jan

Tom
1 year ago

Dividend Aristocrats are great but I prefer direct stocks and no ETF. I love them. That’s why I’ve created a nice monthly updated Excel-table with over 1.000 of the best long-term dividend growth stocks. All Dividend Aristocrats are incluced :-). You find them on my blog. Altria is the top yielding stocks but more important than a high dividend is dividend growth. It’s good to see that there are still enough low debt-loaden Dividend Aristocrats. Thank you for the great article.