In 2013, we developed what is now known as WisdomTree’s Quality Dividend Growth methodology. At the time, many of the largest technology companies paid no dividend at all. Today, it is increasingly difficult to find mega-cap tech firms that are not returning cash to shareholders and growing those payments consistently. Markets have evolved, leadership has shifted and volatility has come and gone, but the discipline of focusing on profitable companies with sustainable dividend growth has endured. As we move through early 2026’s market turbulence, it is worth stepping back and reassessing nearly 13 years of live results through a long-term lens, focusing on some of the largest exchange-traded funds (ETFs) that represent strategies targeting this concept of ‘dividend growth¹.

When I start looking at results, I try to simplify the picture into three things:

• Average annual returns, preferably over a period of more than 10 years, if possible.
• Average annual volatility, to give a sense of the experience of generating those returns.
• Average annual Sharpe ratio, which measures units of return in excess of a risk-free rate relative to the level of volatility.

We see the results in Figure 1a.

Figure 1a: A Performance Snapshot of Different U.S. Dividend Growth Equity ETFs

To help with further context:

• The WisdomTree U.S. Quality Dividend Growth Fund (DGRW) is designed to track the total return performance of, before fees and expenses, the WisdomTree U.S. Quality Dividend Growth Index. This strategy focuses on dividend-paying companies, weighted by their cash dividends, and focused on companies with higher return on equity, return on assets, and earnings growth expectations. Notably, it does not focus on past dividend growth behavior for constituents.
• VIG, the Vanguard Dividend Appreciation Index Fund ETF Shares, is designed to track the total return performance of the S&P U.S. Dividend Growers Index. is designed to measure the performance of U.S. companies that have followed a policy of consistently increasing dividends every year for at least 10 consecutive years. The index excludes the top 25% highest-yielding² eligible companies from the index.
• SDY, the State Street SPDR S&P Dividend ETF, is designed to track the total return performance of the S&P High Yield Dividend Aristocrats Index. The index is designed to measure the performance of companies within the S&P Composite 1500® that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 years.
• DVY, the iShares Select Dividend ETF, is designed to track the total return performance of the Dow Jones U.S. Select Dividend Index. The index aims to represent the U.S.'s leading stocks by dividend yield. Dividend policy over the prior 5-year period factors into the potential inclusion analysis.
• DGRO, the iShares Core Dividend Growth ETF, is designed to track the total return performance of the Morningstar U.S. Dividend Growth Index. The index is designed to provide exposure to securities in the Morningstar U.S. Markets Index with a history of uninterrupted dividend growth and the capacity to sustain that growth.

Of course, there are nuances to each of these approaches, but the overall focus is the same—large-cap stocks, predominantly, with a specific policy of looking at the underlying dividend behavior of underlying constituents. DGRW is the only approach in which the underlying strategy is not focused on past dividend growth behavior.

Figure 1b: Standardized Performance

Same ‘Dividend Growth’ Concept but Very Different Portfolios

On the surface, each strategy sits under the banner of “dividend growth.” But the sector exposures tell a far more nuanced story. Some approaches lean heavily into Technology and Communication Services, capturing the structural shift toward cash-generative mega-cap growth. Others tilt meaningfully toward Utilities, Financials or Industrials, reflecting a more traditional income orientation. These differences are not cosmetic; rather, they shape return patterns, volatility profiles and drawdown behavior over full cycles. Analysis of dividend policies and potential growth may be a common thread, but sector composition could have a big impact on how each portfolio participates in market leadership, economic sensitivity and structural change. The overall concept may be similar. The economic exposure is not.

Figure 2: The Sector DNA of Dividend Growth Strategies

Sector Exposure and the Quality Trade-Off

Sector weights are not just about economic sensitivity; they meaningfully influence fundamental characteristics. Strategies like SDY and DVY, with larger allocations to Utilities, tend to exhibit lower average return on equity and return on assets, reflecting the capital-intensive and regulated nature of that sector. Earnings growth expectations also tend to be more modest, consistent with stable but slower-growing cash flows. By contrast, portfolios with heavier exposure to Information Technology and Communication Services typically show stronger profitability metrics and higher expected earnings growth, driven by asset-light business models and structural revenue expansion. Over time, those fundamental differences can compound into materially different risk-adjusted outcomes.

Figure 3: Sector Decisions Show as Quality & Growth Outcomes

Conclusion: Position for the Cycle, Not the Headline

Dividend growth is not a monolith. Sector exposure, profitability and earnings growth expectations meaningfully shape long-term outcomes. In calmer markets, those differences can feel subtle. During volatility, they compound. Investors concerned about valuation risk are often concerned about durability—owning businesses that can sustain cash flows and adapt across cycles. A disciplined focus on quality and growth does not eliminate drawdowns, but it can help position portfolios with stronger foundations when uncertainty inevitably resurfaces.

Figure 4: Additional Information

¹ The ETFs were selected as among the largest ETFs by assets under management as of February 2026 that have, in their underlying index, a focus on some measure of ‘dividend growth’ for underlying constituents.

² Yield refers to dividend-yield.