This Dividend Fund Seeks Rising Dividends

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

A dividend-driven exchange-traded fund (ETF) worth considering for income investors is SPDR S&P Dividend ETF (SDY), which I view as a slow-and-steady performer.

The fund’s holdings feature companies within the S&P 500 that have maintained a rising dividend policy for at least 20 years. Some analysts suggest that stocks which pay and increase dividends consistently have better overall performance than the general market in the long run.

If true you agree, then it only makes sense to like a strategy that has beaten the market dependably in the past. For the past 12 months, this fund has outperformed the S&P 500 by a large margin, particularly considering that its holdings are all S&P companies themselves.

This fund is up 10.46% in that 12-month period, which is a good return for any virtually any investment. In comparison, its sister fund, the SPDR S&P 500 ETF (SPY), which is designed to mirror the performance of the S&P 500, is up only 2.6%. And that’s not counting SDY’s 2.36% dividend yield. The expense ratio for owning this fund is 0.35%, and its market cap is around $50 billion.

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View the current price, volume, performance and top 10 holdings of SDY at ETFU.com.

The largest holdings in this fund at the moment include HCP Inc. (HCP), 2.88%; AT&T Inc. (T), 2.02%; Chevron Corp. (CVX), 1.73%; Realty Income Corp. (O), 1.68%; and National Retail Properties Inc. (NNN), 1.64%.

Even though this fund’s strategy won’t amaze your friends, its performance might very well amaze you. If you’re looking for a fund that can provide more upside in the right circumstances than its simple presentation may suggest, SPDR S&P Dividend ETF (SDY) might be the fund you’re looking for.

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As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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