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Globe and Mail
21 hours ago
- Business
- Globe and Mail
SDY Is a Popular Dividend ETF for Passive Income. But Is It the Best?
When it comes to investing, it makes a lot of sense for many of us to opt for exchange-traded funds (ETFs), which are funds that trade like stocks. With classic mutual funds, if you want to buy into one, you place your order and it gets filled at the end of the day, at a price based on the closing prices of its components that session. With an ETF, you can place an order to buy at any time during the trading day and that order can be executed immediately. ETFs come in a wide variety, and many are low-fee index funds, including the popular Vanguard S&P 500 ETF (NYSEMKT: VOO). It's worth considering dividend-focused ETFs, too, as they can deliver valuable income for decades, without your having to research and choose individual dividend-paying stocks. One popular fund of this type is the SPDR S&P Dividend ETF (NYSEMKT: SDY). Would it be a good fit for your portfolio? Why dividends? Dividend-paying stocks are a more powerful tool for building investors' wealth than many people realize. Part of the reason is that in order to commit to paying a regular dividend, a company's management must be fairly confident in the reliability of cash flows, finding them sufficient to support the dividend. No company wants to have to shrink or eliminate a dividend, as that would be a red flag to investors. Consider this tidbit from the folks at Hartford Funds: "Going back to 1960, 85% of the cumulative total return of the S&P 500 Index can be attributed to reinvested dividends and the power of compounding." Meet the SPDR S&P Dividend ETF SPDR S&P Dividend ETF tracks the S&P High Yield Dividend Aristocrats index, which restricts its components to companies in the S&P Composite 1500 that have increased their payouts annually for at least 20 consecutive years. The ETF recently yielded a solid 2.59%. Here's how it has performed in recent years Over the Past... Average Annualized Gain 3 years 6.31% 5 years 11.34% 10 years 9.24% 15 years 11.12% Source: Morningstar. Figures as of June 25, 2025. You'll note that those are not the fattest returns -- but they come along with some durability, as not every company is so solidly built that it can not only pay dividends for at least 20 years, but increase them annually, too. The SPDR S&P Dividend ETF recently held positions in 149 companies, and its top 10 holdings made up about 18% of its total value. Those recent top holdings were: Stock Percent of ETF Microchip Technology 2.41% Verizon Communications 2.36% Realty Income 2.19% Target 1.80% Chevron 1.70% Texas Instruments 1.62% Archer-Daniels-Midland 1.39% Eversource Energy 1.38% Kimberly Clark 1.36% NextEra Energy 1.34% Source: Morningstar. Figures as of June 24, 2025. Is the SPDR S&P Dividend ETF the best dividend ETF? So -- is the SPDR S&P Dividend ETF the best dividend ETF? Well, sure, for some people. But there are other solid dividend-focused ETFs to consider. Here are some, along with an S&P 500 index fund, for comparison. JPMorgan Equity Premium Income ETF (NYSEMKT: JEPI) 8.01% 11.73% N/A iShares Preferred & Income Securities ETF (NASDAQ: PFF) 6.68% 3.22% 3.21% Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) 3.97% 13.34% 10.92% Fidelity High Dividend ETF (NYSEMKT: FDVV) 3.02% 17.91% N/A Vanguard High Dividend Yield ETF (NYSEMKT: VYM) 2.86% 14.60% 10.08% SPDR S&P Dividend ETF 2.59% 11.77% 9.29% iShares US Real Estate ETF (NYSEMKT: IYR) 2.55% 7.26% 6.09% iShares Core Dividend Growth ETF (NYSEMKT: DGRO) 2.23% 13.94% 11.75% Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) 1.79% 14.07% 11.83% First Trust Rising Dividend Achievers ETF (NASDAQ: RDVY) 1.67% 17.61% 12.68% Vanguard S&P 500 ETF (NYSEMKT: VOO) 1.25% 16.54% 13.15% Source: Yahoo! Finance and Morningstar. Figures as of June 24, 2025. Before you jump at the fattest yield you see, remember that dividend growth is important, too. An ETF with a yield of 4% today might be more tempting than one with a yield of 3%, but the fund with the 3% yield might be growing its payouts faster, and wind up delivering more actual income than the other within a few years. Remember that the SPDR S&P Dividend ETF is focused on dividend growers. Its quarterly payout in June 2025 was $0.927 per share, up from $0.68 in June 2020 and $0.503 in June 2015. Note, too, that the JPMorgan Equity Premium Income ETF is a different kind of fund, not purely a holder of dividend-paying stocks. And the iShares Preferred & Income Securities ETF is focused on preferred stock, which tends to appreciate in value more slowly. So dig in deeper into any ETF that intrigues you. Any of the ones above may serve you well, delivering increasing passive income to you and your portfolio for many years or decades. Should you invest $1,000 in SPDR Series Trust - SPDR S&P Dividend ETF right now? Before you buy stock in SPDR Series Trust - SPDR S&P Dividend ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SPDR Series Trust - SPDR S&P Dividend ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor 's total average return is1,062% — a market-crushing outperformance compared to177%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025 Selena Maranjian has positions in NextEra Energy, Realty Income, Schwab U.S. Dividend Equity ETF, and Verizon Communications. The Motley Fool has positions in and recommends Chevron, NextEra Energy, Realty Income, Target, Texas Instruments, Vanguard Dividend Appreciation ETF, Vanguard S&P 500 ETF, and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
Yahoo
02-06-2025
- Business
- Yahoo
Should SPDR S&P Dividend ETF (SDY) Be on Your Investing Radar?
Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the SPDR S&P Dividend ETF (SDY) is a passively managed exchange traded fund launched on 11/08/2005. The fund is sponsored by State Street Global Advisors. It has amassed assets over $19.87 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market. Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts. Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets. Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio. Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space. It has a 12-month trailing dividend yield of 2.59%. Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis. This ETF has heaviest allocation to the Industrials sector--about 20% of the portfolio. Consumer Staples and Utilities round out the top three. Looking at individual holdings, Verizon Communications Inc (VZ) accounts for about 2.52% of total assets, followed by Realty Income Corp (O) and Target Corp (TGT). The top 10 holdings account for about 16.94% of total assets under management. SDY seeks to match the performance of the S&P High Yield Dividend Aristocrats Index before fees and expenses. The S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years. The ETF has added roughly 2.59% so far this year and is up about 8.15% in the last one year (as of 06/02/2025). In the past 52-week period, it has traded between $121.58 and $144. The ETF has a beta of 0.79 and standard deviation of 14.70% for the trailing three-year period, making it a medium risk choice in the space. With about 152 holdings, it effectively diversifies company-specific risk. SPDR S&P Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SDY is a good option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space. The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $68.13 billion in assets, Vanguard Value ETF has $133.45 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%. An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors. To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SPDR S&P Dividend ETF (SDY): ETF Research Reports Verizon Communications Inc. (VZ) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Realty Income Corporation (O) : Free Stock Analysis Report Vanguard Value ETF (VTV): ETF Research Reports Schwab U.S. Dividend Equity ETF (SCHD): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
26-05-2025
- Business
- Yahoo
Is SPDR S&P Dividend ETF (SDY) a Strong ETF Right Now?
The SPDR S&P Dividend ETF (SDY) made its debut on 11/08/2005, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market. Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy. Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns. But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market. This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics. Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns. SDY is managed by State Street Global Advisors, and this fund has amassed over $19.68 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the S&P High Yield Dividend Aristocrats Index. The S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years. Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same. Operating expenses on an annual basis are 0.35% for SDY, making it on par with most peer products in the space. SDY's 12-month trailing dividend yield is 2.63%. Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis. This ETF has heaviest allocation in the Industrials sector - about 20% of the portfolio. Consumer Staples and Utilities round out the top three. Looking at individual holdings, Verizon Communications Inc (VZ) accounts for about 2.52% of total assets, followed by Realty Income Corp (O) and Target Corp (TGT). Its top 10 holdings account for approximately 16.94% of SDY's total assets under management. The ETF has added about 1.33% and is up about 5.71% so far this year and in the past one year (as of 05/26/2025), respectively. SDY has traded between $121.58 and $144 during this last 52-week period. The ETF has a beta of 0.79 and standard deviation of 14.71% for the trailing three-year period, making it a medium risk choice in the space. With about 152 holdings, it effectively diversifies company-specific risk. SPDR S&P Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider. Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $67.43 billion in assets, Vanguard Value ETF has $131.73 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%. Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value. To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SPDR S&P Dividend ETF (SDY): ETF Research Reports Verizon Communications Inc. (VZ) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Realty Income Corporation (O) : Free Stock Analysis Report Vanguard Value ETF (VTV): ETF Research Reports Schwab U.S. Dividend Equity ETF (SCHD): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
