Top 5 Dividend ETF Searches By Financial Pros

One of the beauties of a free subscription to The Juice newsletter is that you have access to the insights and learnings we glean from Trackstar, our proprietary sentiment indicator that tracks stock and ETF search interest, from everyday investors and financial professionals, across the platforms of our 100+ financial media partners.

There’s a ton of data we can sort and filter to not only find ideas, but explain the ins and outs of ETF investing. Through this process we learn a lot about how to thoughtfully diversify your portfolio. 

As such, we’ll continue to use Trackstar to hit up various ETF categories and subcategories to see where there is (and isn’t) interest. Sometimes, it’s as good to catch names that fly under the radar as it is to talk about what’s on top.

We love dividends here at The Juice so, the other day, we checked to see the dividend ETFs financial professionals have been searching for most. 

Much to our surprise, the dividend ETF that always commands the most search interest from retail investors — the Schwab US Dividend Equity ETF (SCHD) — doesn’t make the top five among advisors. Also to our surprise, there’s relatively low search interest for these ETFs among the pros. 

While SCHD generated nearly 20,000 searches among retail, it only got a handful of looks from the pros. Given that we expect interest rates to come down at some point, we would have expected more interest in dividend-focused, income-producing equities. 

In any event, the name that tops today’s Trackstar top five — the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) — is worth a look. Not only has it outperformed SCHD over the last year (+21.2% to 7.4%), but it can help continue to advance the discussion we have been having around how to decide if you should buy a relatively fringe ETF to complement/supplement your core holdings. 

Quick review, in case you missed it. 

We have conducted the aforementioned exercise using SCHD, a classic smart beta ETF, as well as the #2 and #3 names on today’s Trackstar list, the Vanguard Dividend Appreciation ETF (VIG) and the Vanguard High Dividend Yield ETF (VYM) ETFs. 

We have done likewise with everything from international dividend ETFs to the most popular small cap ETFs to the top pharmaceutical ETFs.  

We’re building quite the ETF library and intend to continue to grow it over time. So stick with The Juice and invite a friend to join us. 

As for SDVY, as its name makes clear, the ETF invests in stocks with a history of increasing their dividends, using the following specific criteria, direct from First Trust’s website:

• The Index begins with the stocks in the Nasdaq US Mid Cap Index and the Nasdaq US Small Cap Index and eliminates those companies classified as a Real Estate Investment Trust by the Industry Classification Benchmark.
• To be eligible for inclusion in the Index, companies must have:
• a minimum three-month average daily dollar trading volume of $2 million.
• a minimum market cap of $500 million.
• paid a dividend in the trailing twelve-month period greater than the dividend paid in the trailing twelve-month period three and five years prior.
• positive earnings per share in the most recent fiscal year greater than the earnings per share three fiscal years prior.
• a cash to debt ratio greater than 25%.
• a trailing twelve-month period payout ratio no greater than 65%.

So, another smart beta ETF that uses mid cap and small cap indices to select its holdings. 

While not equal weight, no one name makes up more than 1.4% of the portfolio, as of mid-June, 2024. Here are the top ten stocks in SDVY:

• Texas Pacific Land Corporation (TPL)
• Sylvamo Corporation (SLVM)
• Dell Technologies Inc. (DELL)
• NetApp (NTAP)
• Perdoceo Education (PRDO)
• Kontoor Brands (KTB)
• Select Water Solutions (WTTR)
• PHINIA Inc. (PHIN)
• Jackson Financial (JXN)
• Equitable Holdings (EQH)

Whether or not this is the path you want to go down is up to you. This exercise not only drives home the larger point about diversification, but shows you how to execute a strategy. 

If you want to move into some small caps stocks and dividend payers — two areas we think might be set to have their day — it’s reasonable to go with the big names in each space (the iShares Russell 2000 ETF (IWM) and SCHD) and branch out from there. But branching out without duplicating too heavily what you own in your core ETFs. 

The Bottom Line: All it takes is a look inside an ETF to ensure you’re not doubling up (or more) on names you already own. A little extra homework that The Juice loves getting you started on. 

Please let us know if there are areas of the market where you’d like us to check Trackstar for the most popular ETFs so you can run this exercise on them. Next Monday, we’ll expand on today’s installment by looking at fourth and fifth most popular dividend ETFs among financial pros. 

Together we can make sense of diversification, something many investors only scratch the surface on.

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