{"id":2643,"date":"2021-01-12T18:55:26","date_gmt":"2021-01-12T18:55:26","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=2643"},"modified":"2021-01-12T18:57:29","modified_gmt":"2021-01-12T18:57:29","slug":"dividend-etfs-how-to-decide-which-is-best-for-you","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/dividend-etfs-how-to-decide-which-is-best-for-you\/","title":{"rendered":"Dividend ETFs, How to Decide Which is Best for You."},"content":{"rendered":"

By\u00a0<\/span>Herbert Blank<\/span><\/p>\n

Dividend ETFs have seen major inflows in recent years.\u00a0 At a time when most fixed income ETFs have historically low yields, that interest is easy to understand.\u00a0\u00a0<\/span>There are more than 100 US-listed ETFs categorized by Morningstar, ETF.com, ETF Stream and others as Dividend ETFs.\u00a0 Many of these use very different methodologies to satisfy disparate objectives resulting in performance and portfolio holdings files that can look quite different.\u00a0 Let\u2019s take a deeper dive into 4 of them: Dividend ETFs: DVY; NOBL; SCHD; SPYD<\/strong>.<\/span><\/p>\n

5000 stocks and 500 ETFs updated daily by ValuEngine.\u00a0 Free Access\u00a0\u00a0HERE<\/a><\/p>\n

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DVY<\/strong> is the iShares Select Dividend ETF. It seeks to track the investment results of the Dow Jones US Select Dividend Index which is composed of relatively high dividend paying U.S. equities.\u00a0 As with SPYD, the weighting scheme for DVY emphasizes the highest yielding stocks at time of reconstitution. Four major differences: The starting universe is broader than the S&P 500; REITs are excluded; stocks that do not pass both of two dividend coverage and dividend directional screens are also excluded; DVY holds 100 stocks at reconstitution, not 80.<\/span><\/p>\n

NOBL<\/strong> is the ProShares S&P 500 Dividend Aristocrats ETF.\u00a0 Its selection universe is the S&P 500 Dividend Aristocrats Index \u2014 companies within the S&P 500 that have raised their dividends for at least 25 consecutive years.\u00a0 Its focus tends to result in consistent dividend growth, not maximizing dividend yield.\u00a0 The number of constituents in NOBL varies with the number of stocks in the S&P 500 that pass that hurdle. Currently, NOBL has 65 constituents.<\/span><\/p>\n

SPYD<\/strong> is the SPDR Portfolio S&P 500 High Dividend ETF from State Street Global Advisors.\u00a0 It seeks to provide a high level of dividend income through replicating the S&P 500 High Dividend Yield Index. Despite having the 500 in its names, the ETF and the Index contain the top 80 highest dividend-yielding companies within the S&P 500 Index at the time the index changes its holdings, known as reconstitution.\u00a0\u00a0<\/span><\/p>\n

SCHD<\/strong> is the Schwab US Dividend ETF. It seeks to track the investment results of the <\/span>Dow Jones U.S. Dividend 100 Index, a modified cap-weighted index that is designed to measure the performance of 100 high-dividend-yielding stocks in the U.S. with a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios at time of reconstitution.\u00a0<\/span><\/p>\n

Research Reports on each of these ETF’s are available here: http:\/\/www.valuengine.com\/rep\/mresearch_report<\/a><\/strong><\/p>\n

These descriptions seem very similar, but the following analysis highlights key differences that result from the differences in the details of the methodologies.\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
Ticker<\/b><\/td>\nDividend Yield<\/b><\/td>\n Beta<\/b><\/td>\n1-Yr Return<\/b><\/td>\n5-Yr Avg Return<\/b><\/td>\nVolatility<\/b><\/td>\nSharpe Ratio<\/b><\/td>\n VE Rating<\/b><\/td>\n<\/tr>\n
DVY<\/span><\/td>\n3.66%<\/span><\/td>\n0.98<\/span><\/td>\n-8.97%<\/span><\/td>\n3.98%<\/span><\/td>\n16.69%<\/span><\/td>\n0.24<\/span><\/td>\n1<\/span><\/td>\n<\/tr>\n
NOBL<\/span><\/td>\n2.14%<\/span><\/td>\n0.92<\/i><\/b><\/td>\n5.68%<\/span><\/td>\n9.19%<\/span><\/td>\n14.85%<\/i><\/b><\/td>\n0.62<\/span><\/td>\n3<\/i><\/b><\/td>\n<\/tr>\n
SCHD<\/span><\/td>\n3.09%<\/span><\/td>\n0.96<\/span><\/td>\n13.78%<\/i><\/b><\/td>\n10.18%<\/i><\/b><\/td>\n15.31%<\/span><\/td>\n0.66<\/i><\/b><\/td>\n2<\/span><\/td>\n<\/tr>\n
SPYD<\/span><\/td>\n4.95%<\/i><\/b><\/td>\n1.17<\/span><\/td>\n-16.52%<\/span><\/td>\n1.58%<\/span><\/td>\n21.03%<\/span><\/td>\n0.08<\/span><\/td>\n1<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

SPYD, the SPDR Portfolio S&P 500 High Dividend ETF supplies the highest dividend yield of the 4 ETFs in the table.\u00a0 This follows directly from its methodology which is singularly focused on the highest yielding stocks in the S&P 500 Index. The other three all have screens for consistent dividend growth and\/or dividend coverage and\/or fundamental strength.\u00a0 For conservative investors, the trade-offs for maximizing yield are considerable.\u00a0 SPYD is the most volatile by far.\u00a0 It also has the lowest returns over the past year and the past 5 years.\u00a0 It also gets VEs lowest rating of one V for current investment.\u00a0\u00a0<\/span><\/p>\n

DVY, the iShares Select Dividend ETF has the second best dividend yield at 3.7% but more than 25% less than that of SPYD.\u00a0 It is much less volatile than SPYD too. The other two ETFs are both less volatile than DVY but the differences are rather modest in comparison.\u00a0 DVY had a negative return in 2020 but less than half as large a drawdown as suffered by SPYD and its 5-year average return of about 4% is more than double DVY\u2019s meager result during the same span.\u00a0 However, the 1- and 5-year return numbers are both much higher for NOBL and SCHD.\u00a0 DVY also gets VE\u2019s lowest rating of one V for current investment.\u00a0\u00a0<\/span><\/p>\n

SCHD, the Schwab US Dividend ETF, provides a much more balanced trade-off between dividend yield and historical price performance.\u00a0 The yield is a healthy 3.1% as compared with just 2,1% for NOBL.\u00a0 Yet for the past 1 year and 5 years it has edged NOBL in price performance while NOBL was slightly less volatile.\u00a0 In fact, last year SCHD\u2019s price gain of 13.8% was more than double NOBL\u2019s gain of 5.7%.\u00a0 The fundamental selection screens used by Schwab paid handsome dividends in 2020.\u00a0 If may have resulted in a few overvalued holdings for the year-ahead however, SCHD gets 2 Vs from ValuEngine for the year ahead which while better than one is still below average. Timing is everything in the stock market.\u00a0 Nevertheless, if above average yield and solid historical price performance are both important to you, take a close look at SCHD.<\/span><\/p>\n

Financial Advisory Services based on ValuEngine research available through\u00a0www.ValuEngineCapital.com<\/a><\/strong><\/p>\n

Although Dividend is in the ETFs name, I consider NOBL, the ProShares S&P 500 Dividend Aristocrats Index more of a high-quality blue-chip ETF than a high-yield ETF.\u00a0 In fact, its dividend yield is slightly below the 2.2% of its parent index, the S&P 500.\u00a0 NOBL is a very appropriate holding for conservative investors.\u00a0 It has a low Beta and low Price volatility and relatively consistent price performance.\u00a0 NOBL gets 3 Vs from ValuEngine, a solid if middle-of-the-spectrum rating.\u00a0\u00a0<\/span><\/p>\n

So even though the names of all four ETFs emphasize dividends, an investor should make it his or her business to dig beneath the surface.\u00a0 The ValuEngine ETF reports<\/a> assist in doing just that and facilitates comparisons.\u00a0 In short, always read the fund fact sheets and summary prospectus documents to understand what you are actually buying.\u00a0 Next, to analyze key differences, come to ValuEngine to quantify the strengths and weaknesses of each ETF under consideration.\u00a0\u00a0<\/span><\/p>\n

Financial Advisory Services based on ValuEngine research available through\u00a0www.ValuEngineCapital.com<\/a><\/p>\n

Subscribers log in\u00a0HERE<\/a><\/p>\n

Herb Blank<\/p>\n

support@ValuEngine.com | ValuEngine, Inc | (321) 325-0519<\/p>\n

www.ValuEngine.com<\/a>\u00a0to log in, or free two-week full trial.<\/p>\n

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ValuEngine.com DISCLAIMER is\u00a0HERE\u00a0<\/a>and PRIVACY POLICY is\u00a0HERE<\/a><\/h6>\n","protected":false},"excerpt":{"rendered":"

By\u00a0Herbert Blank Dividend ETFs have seen major inflows in recent years.\u00a0 At a time when most fixed income ETFs have historically low yields, that interest is easy to understand.\u00a0\u00a0There are more than 100 US-listed ETFs categorized by Morningstar, ETF.com, ETF Stream and others as Dividend ETFs.\u00a0 Many of these use very different methodologies to satisfy … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[130,1,39],"tags":[1750,1751,1746,1704,1752,1719,1733,1753,1731,1747,1510,1748,1749,93,28,1659,63],"_links":{"self":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2643"}],"collection":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/comments?post=2643"}],"version-history":[{"count":6,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2643\/revisions"}],"predecessor-version":[{"id":2655,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2643\/revisions\/2655"}],"wp:attachment":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/media?parent=2643"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/categories?post=2643"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/tags?post=2643"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}