Sure, HDV’s 13.2% utilities weight, the ETF’s third-largest sector weight has helped, but that allocation is not close to the nearly 20% the fund devotes to health care stocks or the almost 25% to consumer goods. HDV has a trailing 12-month yield of 3% and iShares recently slashed the ETF’s annual fee to 0.12% from 0.4%.
Of course, the Vanguard High Dividend Yield ETF (NYSEArca: VYM), one of the four largest U.S. dividend ETFs, cannot be ignored in the conversation about high-yield funds. VYM has managed a year-to-date gain of almost 7% despite a paltry-by-comparison utilities weight of just 7.6%.
That is less than half the weight VYM allocates to the technology sector. In fact, Apple (NasdaqGS: AAPL) is the ETF’s top holding. In addition to technology, five other sectors in VYM receive larger weights than do utilities stocks. More than 30 stocks are larger parts of VYM than Duke Energy (NYSE: DUK), the ETF’s largest utilities holding.
Vanguard High Dividend Yield ETF
Tom Lydon’s clients own shares of Apple.