Cozying up to the Shareholder Yield ETF

Exchange traded funds have given investors multiple avenues of access to the stock buyback theme. From the prosaic ETFs that mainly focus on pure buybacks to those funds that employ other metrics, such as net share count reduction and evaluation of balance sheet integrity, there are plenty of ETF options for investors looking to seize buyback momentum.

Though it includes buybacks as part of its stock selection process, the actively managed Cambria Shareholder Yield ETF (NYSEArca: SYLD) also includes dividends and dwindling debt burdens as part of its selection criteria.

SYLD, which debuted nearly two years ago, invests in 100 (actually 101 at last count) with market caps of least $200 million. Indeed, buybacks can be viewed as shifty accounting, but an explicit focus on dividends misses the buyback and debt reduction components, according to Cambria, indicating the concept of blending the three virtues as espoused by SYLD can be rewarding. The ETF’s methodology is working as highlighted by its nearly 26% gain since inception. [Best of Three Worlds in This ETF]

Although it is actively managed and that management style has taken its lumps in recent years, SYLD does offer opportunity for patient investors.

“All in all, these are three great measures of shareholder friendliness. SYLD has a bulletproof collection of stocks that will survive Armageddon. And its active management ensures that you’re not left holding a portfolio of dogs the next time a bear market hits,” according to Charles Sizemore.

Indeed, it is accurate to say to SYLD’s equally-weighted lineup is bereft of stocks with dog status. The ETF’s holdings include Dow components Apple (NasdaqGS: AAPL), 3M (NYSE: MMM), Travelers (NYSE: TRV), Pfizer (NYSE: PFE) and DuPont (NYSE: DD). The dividend trajectories for those companies have been increasingly favorable in recent years.