- The Dow Jones Industrial Average is back into positive territory
- DIA is up 6.5% over the past month and 1.0% year-to-date
- DJD rose 8.0% over the past month and 1.2% year-to-date
The Dow Jones Industrial Average is back into positive territory, recovering from one of the worst starts to the new year and setting up for its biggest quarterly comeback since 1933. However, one Dow-related exchange traded fund has been quietly outpacing the benchmark index.
The SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA), which tracks the Dow Jones Industrial Average, is up 6.5% over the past month and 1.0% year-to-date.
Meanwhile, the Guggenheim Dow Jones Industrial Average Dividend ETF (NYSEArca: DJD), which weighs the 30 Dow stocks by yield, rose 8.0% over the past month and 1.2% year-to-date.
DJD provides an alternative, strategic beta approach to the DJIA by weighting each security by dividend yield, instead of price. The ETF’s top holdings include Chevron (NYSE: CVX) 6.4%, Verizon Communications (NYSE: VZ) 5.1%, General Electric (NYSE: GE) 4.8%, McDonald’s Corp (NYSE: MCD) 4.6% and Procter & Gamble (NYSE: PG) 4.6%.
In comparison, DIA, which weights components based on the stock price, top holdings include 3M Company (NYSE: MMM) 6.4%, Goldman Sachs Group (NYSE: GS) 6.0%, International Business Machines (NYSE: IBM) 5.8%, Home Depot (NYSE: HD) 5.1% and Boeing Company (NYSE: BA) 5.1%.
The Dow, along with the broader equities market, is rallying after the U.S. Federal Reserve called for only two rate hikes later this year, which weighed on the U.S. dollar.
“It’s a pretty equity-friendly backdrop,” David Lefkowitz, senior equities analyst at UBS Americas Wealth Management, told Reuters.
The Dow also continued to strengthen on the improving oil market.
“Clearly the market has decided the best way to figure out what’s going on with global growth is to look at oil,” Chuck Self, chief investment officer at iSectors, told IBTimes.
Erin Gibbs of S&P Capital IQ argues that stocks might be in the clear if oil can maintain its gains.
“If oil can stay above $40 it will really help earnings growth,” Gibbs told CNBC. “The earnings growth for the Dow is an expected 33 percent for EPS growth this year. This is looking very good for the year.”
Guggenheim Dow Jones Industrial Average Dividend ETF