ETF Comparison: iShares Core Dividend Growth ETF (DGRO) Versus ProShares S&P 500 Dividend Aristocrats ETF (NOBL)

DGRO vs NOBL: Total cost of ownership

When it comes to total cost of ownership, DGRO clearly takes the lead. As part of the iShares "Core" lineup, it boasts a low expense ratio of just 0.08%. This is notably cost-effective, especially when compared to its counterpart.

On the flip side, NOBL carries a considerably higher expense ratio of 0.35%. This places it on par with actively managed funds like the JPMorgan Equity Premium Income ETF

, which is substantial for a passively managed dividend ETF.

In terms of annual costs on a $10,000 investment, you're looking at just $8 for DGRO compared to $35 for NOBL—over four times the cost.

Despite NOBL's higher fee, it does edge out slightly in terms of liquidity, with a 30-day median bid-ask spread of 0.018%, compared to 0.027% for DGRO. However, this small difference in liquidity is generally inconsequential for most investors.

Overall, from a total cost of ownership perspective, DGRO is the more economical choice by a significant margin. It's one of the cheapest dividend growth ETFs out there.

DGRO vs NOBL: Methodology and holdings

DGRO

follows the Morningstar US Dividend Growth Index, which boasts a broader portfolio with 413 holdings, while NOBL

NOBL

tracks the S&P 500 Dividend Aristocrats Index with a more concentrated portfolio of 65 holdings. Both ETFs offer comparable dividend yields of above 2%.

DGRO's selection methodology is detailed. It includes stocks that have increased dividends for at least five consecutive years and maintain a payout ratio under 75%, alongside a positive earnings forecast.

Additionally, it excludes REITs and the highest 10% of stocks by dividend yield within its selection universe. The ETF then weights its holdings based on the total dollar value of the dividends paid, not the yield, with a cap of 3% per holding to maintain diversification.

On the other hand, NOBL's approach is more straightforward. It selects stocks from the S&P 500 that have raised their dividends for 25+ consecutive years and applies an equal-weight strategy to each.

Sector exposure varies between the two: DGRO

aligns more closely with the broader S&P 500, favoring technology, healthcare, and financials, whereas NOBL

NOBL

leans heavily towards industrials and consumer staples, reflecting its focus on long-standing dividend payers.

In terms of portfolio concentration, DGRO's top 15 holdings represent 35.18% of its total assets, moderated by the 3% cap per stock at each rebalance. NOBL, with its equal weighting, sees its top 15 holdings make up 25.93% of the portfolio, influenced mainly by performance dynamics post-rebalance.

DGRO vs NOBL: Risk and return

Over the last three years, one year, and year-to-date (YTD) periods, DGRO

has consistently outperformed NOBL, also attracting more net inflows while NOBL

NOBL

has experienced net outflows.

In terms of long-term performance, DGRO has also led with a compound annual growth rate (CAGR) of 11.92% compared to NOBL's 10.66% and has posted a slightly higher Sharpe ratio of 0.58 versus 0.52 for NOBL.

Despite NOBL's focus on dividend aristocrats—companies with 25+ years of consecutive dividend growth—the ETF has not demonstrated significantly better risk metrics. Both DGRO

and NOBL

NOBL

have shown comparable levels of volatility and similar depths and durations of maximum drawdowns over the analyzed periods.

Personally, I prefer DGRO

for several reasons. NOBL's methodology, which solely focuses on the dividend growth streak, seems too simplistic and backwards-looking, subject to survivorship bias.

Its higher expense ratio of 0.35% also constitutes a substantial drag on performance. Moreover, the equal-weighting approach in a dividend-focused ETF seems arbitrary and not necessarily optimal for this investment style.

Conversely, DGRO employs a more forward-looking approach by incorporating quality metrics such as consensus earnings forecasts and payout ratios, effectively screening out yield traps.

It also weights holdings based on the total dollar value of dividends paid, rather than yield alone, which I believe is a more rational approach to dividend investing. Finally, all these benefits come at a much lower expense ratio of 0.08%.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.