That means VIG is currently light on financial services and technology names, but the fund also features scant exposure to telecom and utilities stocks, indicating it is not overly vulnerable to rising interest rates. Top-10 holdings include Procter & Gamble (NYSE: PG), Pepsi (NYSE: PEP) and Exxon Mobil (NYSE: XOM). S&P Capital IQ rates VIG overweight.
The research firm also has an overweight rating on the $3.1 billion iShares High Dividend ETF (NYSEArca: HDV). HDV is heavily allocated to Dow stocks as seven of its top-10 holdings are members of the blue chip index. Top holdings include AT&T (NYSE: T), Chevron and Johnson & Johnson (NYSE: JNJ).
With an almost 23% combined weight to utilities and telecom names, HDV does have some interest rate sensitivity but over a third of the fund’s weight goes to discretionary and tech stocks, two of the better performing sectors in rising rate environments. [Three Dividend ETFs That Soared in 2013]
S&P Capital IQ also rates the Schwab US Dividend Equity ETF (NYSEArca: SCHD) overweight. With an expense ratio of 0.07% per year, SCHD is the least expensive dividend ETF on the market and Charles Schwab clients can trade the fund-commission free.
Like VIG, SCHD has scant exposure to the telecom and utilities sectors, but industrials, technology and consumer discretionary stocks combine for nearly 42% of SCHD’s weight. SCHD also excludes rate-sensitive, yield-generating asset classes such as MLPs, REITs and preferred stocks from its lineup. SCHD’s top-10 holdings include Chevron, Home Depot (NYSE: HD) and Pepsi. [High Quality, Low Fees With This Dividend ETF]
iShares High Dividend ETF
Tom Lydon’s clients own shares of SCHD and Procter & Gamble.