SDY’s 108 holdings are diversified across sectors, though financials (24% of assets), industrials (15%), utilities (14%) and consumer staples (13%) are the highest; information technology, at 4%, is relatively low compared to the broader S&P 1500 index.
While many of the ETF’s positions are hold recommendations from S&P Global Market Intelligence, limiting the upside potential, our favorable ranking is aided by strong risk considerations and cost factors at the ETF and holdings level.
SDY earns positive ranking inputs for the S&P Global Market Intelligence Quality Ranking and Qualitative Risk Assessment of its holdings; the former is quantitative based on earnings and dividend records, while the latter is qualitative from our equity research team. In addition, the ETF’s constituents have strong credit profiles, as assessed by S&P Global Ratings.
Further helping the ETF are its below-average volatility and modest bid/ask spread of $0.02. SDY is also trading well above its 200-day moving average and has bullish technical tendencies. The ETF has a 0.35% expense ratio.
In 2015, SDY declined 0.7%, lagging the 1.0% gain for the S&P 1500 index. However, year to date, SDY’s 13.2% increase is much stronger than the 2.7% for its parent index.
We encourage investors seeking exposure to companies with long record of dividend growth to look closely at what’s inside SDY and not just its performance.