“We can see that the dividend for DIV had been declining for the first 16 months since inception, and then has increased the last 5 months. Given the high concentration of MLPs and mREITs in DIV, which are stock types that have high but unpredictable payouts, investors should understand that the higher yield of DIV is being generated at the expense of dividend stability,” according to post by Stanford Chemist on Seeking Alpha.
DIV’s common stock holdings such as Altria (NYSE: MO) and Dow components AT&T (NYSE: T), Chevron (NYSE: CVX) and Verizon (NYSE: VZ) have lengthy dividend increase streaks.
The point about DIV’s exposure to MLPs and mortgage REITs is an important. Combine those asset classes with utilities stocks and that’s 58.5% of DIV’s weight, indicating the ETF could be vulnerable in the event interest rates rise. When 10-year yields jumped in 2013, DIV rose just 8.5%, barely more than a quarter of the S&P 500’s gain for the year.
However, if the Federal Reserve is slow to raise rates, it would not be surprising to see DIV continue its torrid asset-gathering pace set this year. The ETF is now home to $300.5 million in assets after topping $100 million in June. [Global X Income ETFs Gain Big Assets]
Global X SuperDividend U.S. ETF
