Nevertheless, potential investors should be aware that this type of dividend strategy may not outperform the broader equities market in a strong bull rally since the ETF tilts toward defensive sectors. Specifically, PEY’s largest sector components include utilities 24.5% and consumer staples 19.4%, with exposure to companies like Southern Co. (NYSE: SO) 2.5% and Consolidated Edison (NYSE: ED) 2.3%.
Looking ahead, the ETF may see pressure in a rising interest rate environment, especially given its heavy allocation toward rate-sensitive utility stocks.
Additionally, along with a value tilt, the ETF leans heavily on small- and mid-cap companies, which may be more volatile during short-term shake ups, including a 29.2% position in smal-cap value stocks, 7.7% in small-cap blend, 22.3% in mid-cap value and 3.7% in mid-cap blend.
For more information on dividend stocks, visit our dividend ETFs category.
Max Chen contributed to this article.