Proprietary Data Insights
Top Large Cap Blend ETF Searches This Month
3 Popular Dividend ETFs in Trackstar: Pick One Or Pick Them All?
At The Juice, we don’t tell you what to invest in. We use our data and years of investing experience to help you decide which investments might make the most sense for you.
Case in point: An ETF we hadn’t heard of before suddenly appeared among the top five most searched Large Cap Blend ETFs in Trackstar, our proprietary sentiment indicator.
As you can see at the top of this email, the Amplify YieldShares CWP Dividend & Option Income ETF (DIVO) ranks third, just below usual the typical top two in this category – the Schwab US Dividend Equity ETF (SCHD) and Vanguard High Dividend Yield ETF (VYM).
Why did DIVO surge? Probably because CNBC recently featured this ETF on television and at its website.
Does this mean you should buy DIVO now? Not necessarily. And definitely not on the basis of a quick hit on CNBC. Short- and, in this case, longer-term investment decisions hinge on the specifics of your personal financial situation.
In today’s Juice, we simply highlight the differences between these ETFs of investor interest, add our two cents and let you take it from there.
First, a blend equity simply refers to a fund that holds a mix of growth and value stocks.
SCHD and YVM follow a passive investment approach. That is both ETFs aim to replicate the performance of a specific index. In SCHD’s case, it’s the Dow Jones U.S. Dividend 100 Index. For VYM, it’s the FTSE High Dividend Yield Index.
It’s interesting to note that, while VYM tracks an index of stocks with relatively high dividend yields and SCHD doesn’t focus exclusively on this metric, SCHD, at 3.73%, actually has a higher dividend yield than VYM at 3.11%. This just goes to show that you need to look beyond the headlines and marketing when selecting investments, including ETFs.
By a similar token, just because CNBC featured DIVO doesn’t make it a buy. DIVO follows a completely different portfolio strategy than SCHD and VYM.
DIVO uses an active management approach. That is the fund manager selects stock they think will perform well based on their knowledge, market conditions and developments in individual stocks. The manager does this around a theme. DIVO’s theme is to buy high-quality, dividend-paying stocks and write covered calls on these holdings.
From a performance standpoint, it all depends on the timeframe.
Over the last year, DIVO has outperformed SCHD and VYM, generating a return of just over 1.0% versus roughly 6.6% and 2.7% losses, respectively, in SCHD and VYM. Over the last five years, SCHD takes the top spot with a return of approximately 44.0% compared to gains of just over 24.0% in VYM and just over 25.0% in DIVO.
The Bottom Line: As you know, past performance is not indicative of, nor does it guarantee future results. Your best bet is to consider your goals in association with each fund’s strategy and specific holdings. Later this week, The Juice shows you how to find and assess an ETF’s portfolio.
Our two cents: All three of these ETFs could make sense as part of a comprehensive investment strategy if one of your goals is to hold and generate income from dividend-paying stocks over the long term.
News & Insights
Want to get content like this directly to your inbox? Then we urge you to sign up for our newsletter here