This Dividend ETF is Delightful

Proprietary Data Insights

Financial Pros Top Dividend ETF Stock Searches This Month

RankNameSearches
#1SPDR Portfolio S&P 500 High Dividend ETF999
#2iShares Select Dividend ETF127
#3WisdomTree US High Dividend Fund45
#4First Trust Morningstar Dividend Leaders24
#5Pacer Global Cash Cows Dividend ETF18

ETF Analysis

This Dividend ETF is Delightful

This Dividend ETF is Delightful

Financial pros searching for a dividend ETF turn to one ticker – SPYD.

The SPDR Portfolio S&P 500 High Dividend ETF garners more searches than all the other dividend ETFs combined in our proprietary data.

And it’s not hard to see why.

The stock market has gotten off to its worst start in 50 years. However, that doesn’t mean there isn’t an opportunity out there. 

SPDR Portfolio S&P 500 High Dividend ETF (SPYD) delivers cash flow at a time when stocks are becoming exceptionally cheap.

We like this ETF a lot for investors of all types, and here’s why.

SPDR Portfolio S&P 500 High Dividend ETF (SPYD) 

Dividend ETFs aim to deliver higher dividend payouts than the index average. SPYD is designed to measure the performance of the top 80 high dividend-yielding companies within the S&P 500 Index, based on dividend yield. 

The average market cap of the companies in SPYD is $59 billion. 

  • The index dividend yield is approximately 3.9%. 
  • The average price-to-earnings ratio (FY1) of companies in the portfolio is 13.52x.
  • The average price-to-book ratio of companies in the portfolio is 1.95x.
  • The estimated 3-5 Year EPS growth of companies in the portfolio is 7.75%

SPYD is a low-cost ETF that seeks to provide a high dividend income and an opportunity for capital appreciation. The portfolio is not evenly weighted, but there isn’t one position that has a weight greater than 2%

Here are the top 10 holdings:

In terms of allocation, there is a heavy emphasis on utility, energy, financials, real estate, consumer staples, and health care. These six sectors comprise the majority of the stocks in the portfolio. 

If you invested $10K in SPYD when the ETF started in 2015, it would now be worth over $18K

While this has been one of the worst stocks to start a year in 50 years. The SPYD ETF has performed relatively well. It’s down around 5% YTD.  Which is significantly better than the SPY or QQQ, which are in bear market territory. 

 

Trading SPYD

SPYD sees a considerable amount of action during the trading day. During an average session, more than 3.7 million shares will trade daily. They even offer options, although they are not as frequently traded as the equity. 

 

Investing In SPYD

Investors want to pay close attention to the expense ratio when selecting an ETF. The expense ratio tells us how much the fund will be deducted annually as fees. 

A good rule of thumb is to avoid ETFs that have an expense ratio higher than 1%. In SPYD’s case, the expense ratio is 0.07%, which is exceptional when you compare it to the SPY which has an expense ratio of 0.09%, and the QQQ, which has an expense ratio of 0.20%

Of course, one of the main reasons why investors might be attracted to SPYD is the dividend, which stands at approximately 3.9%. Dividends are distributed quarterly.

 

Our Opinion – 10/10

SPYD has outperformed the overall market in 2022. Not only does it provide investors with an excellent option for capital appreciation, but it shells out an attractive dividend. 

Reinvesting dividends into the ETF is a great strategy to lower the average cost of entry and build a nestegg that preserves and grows capital over time with lower volatility.

We like this ETF, and believe it will continue to do well in this environment for the next 12 months.

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