Financials are DTD’s largest sector weight by 510 basis points over technology and the sector’s dividend growth has helped power the ETF to a 2014 gain of over 15%.
Importantly, there is plenty of room for big bank dividends to grow in 2015. US Bancorp’s payout would need to rise another 73% just to get back to what the bank paid in 2008. Bank of America’s (NYSE: BAC) dividend is up 400% this year, but at 5 cents per quarter, that dividend is nowhere close to the 64 cents a share paid for the third quarter of 2008. [Bullish on Bank ETFs]
Citigroup still pays a measly penny per share per quarter. Those three stocks combine for 14.2% of XLF’s weight.
Financial Select Sector SPDR Fund
Todd Shriber owns shares of XLF.