‘Dividend Dogs’ ETF Gaining Traction
May 17th, 2013 at 11:40am by Paul Weisbruch, Street One Financial
A fund that has steadily grown to $232 million in assets under management, with a consistent month over month increase in average daily trading volume is SDOG (ALPS Sector Dividend Dogs, Expense Ratio 0.40%).
SDOG tracks the S-Network Sector Dividend Dogs Index, which may not be familiar to most, but the concept of this methodology itself will likely resonate with the majority of managers in terms of familiarity.
The S&P 500 Index is screened and dividend yield is a metric that is sought after (the five highest yielding stocks in each S&P 500 sector are bought and equally weighted). In essence, the well-known “Dogs of the Dow” theory is applied to S&P sectors, and this concept has been part of the investment rhetoric for more than two decades now since Michael O’Higgins popularized the strategy in 1991. [Dividend ETF Beating the S&P 500]
SDOG has impressively out-performed the S&P 500 Index since inception (we do note that the live performance period only goes back to July of 2012, the inception of the ETF), and being an investment strategy that seeks dividend yield, it is not surprising to see portfolio managers attracted to the fund given the current themes in the market.
We have mentioned the presence of net buyers for quite some time now in areas of the equity market that focus on “dividend” or “quality” in addition to the never ending hunger for “Low Vol” funds which typically also offer appealing dividend yields.
Currently top holdings in SDOG are BBY (2.36%), STX (2.30%), NOC (2.20%), AVP (2.18%), and HCN (2.17%), and the fund boasts a yield of 3.97% (compared to the yield of say SPY at 2.03%). As one can see, the top five holdings differ significantly from those in the S&P 500 Index itself (AAPL 2.92%, XOM 2.80%, MSFT 1.75%, JNJ 1.67%), but portfolio diversification is notably different (and less) as well (SDOG has 51 holdings while SPY/IVV own 501).
SDOG averages 95,000 shares traded daily, but has had several days above that average level just in May alone, so it is apparent that this strategy is hitting more radars at this point in time.
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