Tech Stocks Are The Fuel For This Top Dividend Fund

Over the past 12 months, Capital Group Dividend Value (CGDV) sports one of the best returns in the Kiplinger ETF 20, our favorite exchange-traded funds. Its 33% one-year return through May beat the S&P 500 as well as 88% of its peers (funds that focus on large-cap stocks trading at value prices).

The exchange-traded fund aims to generate an above-market-average dividend yield by focusing on high-quality U.S. companies — 90% of the portfolio holdings must be stocks of companies with investment-grade credit ratings, and 90% must pay dividends. The fund currently yields 1.3%; the S&P 500, 1.1%.

The result, says fund comanager Chris Buchbinder, is an ETF that typically participates in bullish stretches — though it may not keep up with the broad market — and outperforms during sell-offs.

"Companies that pay dividends have more consistent cash flows, a stronger financial profile and are more resilient during periods of market weakness," he says. Each of the ETF's five managers and a group of analysts independently run a piece of the fund's assets. Over the past three years, the fund's 26% annualized return beat 98% of its peers and the S&P 500.

Managers made a timely move during the 2025 tariff tantrum

During the "Liberation Day" tariff-related sell-off in April 2025, CGDV managers loaded up on semiconductor and semiconductor-related stocks that had fallen dramatically, including Nvidia (NVDA) and Applied Materials (AMAT).

Back then, Nvidia shares hit an intraday low of $87 and it now trades at more than $200. Other chip company stocks rebounded sharply, too. Over the past 12 months, the S&P 500 industry index of semiconductor and semiconductor-related stocks soared 107%.

Before last year's sell-off, the fund had a "relatively modest" exposure to the information technology sector, says Buchbinder. (The sleeve of assets he manages had 0% in tech back then, he notes.) But now, the sector makes up 34% of the portfolio. Don't expect that tilt to change much.

"There's still opportunity in some of these AI semiconductor-related companies and software companies," Buchbinder says.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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