It simply takes time for your wolf-cub to grow. Meanwhile, don’t forget to leave enough water and food in their pen. But to upgrade your pet, they must participate in combat.
Direwolves have 4 rarity levels (Common, Rare, Unique, Legendary). The rarer the wolf, the more perks it has.
The number of available perks depends on the direwolf's rarity. A common direwolf can only have one perk, while a legendary one can have up to 4 perks.
Direwolf Guardian's perks do not work if the pen is out of food and water.