ETF Spotlight: SPDR S&P Dividend (SDY)

ETF Spotlight on SPDR S&P Dividend (NYSEArca: SDY), part of a weekly series.

Assets: $1.3 billion

Objective: Tracks the S&P High Yield Dividend Aristocrats Index (SPHYDATR), which consists of the 50 highest dividend yielding companies in the S&P Composite 1500 Index

Holdings: Top holdings include Integrys Energy Group (NYSE: TEG), Eli Lilly and Compan (NYSE: LLY) and Pitney Bowes Inc. (NYSE: PBI)

What You Should Know

• Dividend aristocrats are a special class of dividend-yielding companies in the S&P 500: they have increased dividend payouts to shareholders every year for the last 25 years
• The yield on SDY is 3.8%
• It’s one of the top performing dividend ETFs year-to-date, up 3.4%
• The top sector weights are: utilities, 24.5%; consumer staples, 16.3%; industrials, 12.9%; and financials, 10.4%

The Latest News

• After the financial crisis, many banks and other financial companies reduced or suspended dividend payments, remarks Alexander Green for Investment U. But according to Howard Silverblatt, senior index analyst at S&P, “the worst is over for dividends. Standard & Poor’s believes that a dividend recovery is under way.” [How to Play the Dividend Comeback.]
• While dividends may still be low at this point, Green points out that over time, they rise and sometimes it’s by a lot. [How to Protect Yourself from the Big Deficit.]
• Gary Gordon for ETF Expert makes another case for dividends: the markets are showing no definitive signs of a fast revival or another downturn. In that situation, Gordon suggests, you might want to go after cash flows from income ETFs or dividend-yielding ETFs. [4 Ways to Use ETFs.]

For past ETF Spotlights, visit our ETF Spotlight page.