ETF Spotlight on iShares Dow Jones Select Dividend Index Fund (NYSEArca: DVY), part of an ongoing series.
Assets: $10.2 billion.
Objective: The iShares Dow Jones Select Dividend Index Fund tries to reflect the performance of the Dow Jones U.S. Select Dividend Index, which screens for stocks based on dividend-per-share growth rates, dividend payout percentage rates and average daily dollar trading volume.
Holdings: Top components include: Lorillard Inc (NYSE: LO) 3.8%, Lochkheed Martin Corp. (NYSE: LMT) 2.8%, Chevron Corp. (NYSE: CVX) 2.0%, Kimberly-Clark Group (NYSE: KMB) 2.0% and CentruyLink Inc. (NYSE: CTL) 2.0%.
What You Should Know:
- BlackRock’s iShares ETF division sponsors the fund.
- DVY has an expense ratio of 0.40%.
- The fund holds 101 securities, with the top 10 accounting for 21.3% of the overall portfolio.
- Sector allocations include: utilities 31.3%, consumer goods 18.6%, industriasl 15.6%, financials 10.5%, basic materials 6.1%, consumer staples 5.6%, health care 3.8%, telecommunications 3.2%, oil & gas 3.0%, technology 1.9% and other 0.3%.
- The ETF has a 30-day SEC yield of 3.52%.
- The fund is up 1.8% over the past month, up 2.7% over the last three months and up 4.8% year-to-date.
- DVY is 3.5% above its 200-day exponential moving average.
- “To reduce the risk of dividend cuts, iShares Dow Jones Select Dividend Index DVY excludes firms with current dividend/share ratios lower than their five-year average and firms that have paid out more than 60% of their earnings over the past five years,” according to Morningstar analyst Samuel Lee.
- “The fund’s yield-weighting produces an idiosyncratic portfolio with a strong mid-cap flavor. Consequently, the fund may occasionally move out of step with its large-cap value brethren,” Lee added. ” We think dividend funds deserve the serious consideration of any investor, risk-averse or not.”
The Latest News:
- Moody’s Investors Service believes more health-care companies will begin issuing dividends, reports Melodie Warner for the Wall Street Journal. [Dividend ETFs May See Higher Payouts]
- “Investors dissatisfied with current low interest rates are increasingly interested in generating immediate income from dividends, as companies generate cash amid low revenue-growth prospects,” Jessica Gladstone, a vice president and senior analyst, said in the article. “Health-care companies will find themselves pressured to initiate or increase dividends as their peers begin paying out.”
- Moody’s points out that a new dividend program does not lead to credit-quality deterioration, but it could result in a shift in financial policies like more acquisitions or stock buybacks down the line.
iShares Dow Jones Select Dividend Index Fund
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.