Dividend growth for the S&P 500 was decent last year, but with income investors fretting about the impact of rising interest rates on dividend stocks, dividend exchange traded funds are sure to be scrutinized this year.
However, the ALPS Sector Dividend Dogs ETF (NYSEArca: SDOG) is one dividend worth considering. SDOG tries to reflect the performance of the S-Network Sector Dividend Dogs Index, which applies the “Dogs of the Dow Theory” on a sector-by-sector basis using the S&P 500 with a focus on high dividend exposure.
SDOG’s underlying has a dividend yield of nearly 4% and a low beta, indicating the combined 30.5% to three defensive sectors – telecom, staples and utilities – helps reduce the fund’s volatility. SDOG charges 0.4% per year and can be traded commission-free on the Schwab ETF OneSource platform.
SDOG “targets the five highest yielding stocks from each of the ten GICS sectors (real estate is currently not considered) and equal weights them. The fund’s current yield of 3.3% far outweighs the S&P 500’s yield and constructs the portfolio in a way that doesn’t reach for dividend payers,” according to a Seeking Alpha analysis of the ETF.