Advisor Asset Management has stepped into the ETF game, launching two high dividend-focused strategies to help income-minded investors meet current cash flow and future capital appreciation goals.
On Wednesday, Advisor Asset Management rolled out the AAM S&P 500 High Dividend Value ETF (NYSEArca: SPDV) and the AAM S&P Emerging Markets High Dividend Value ETF (NYSEArca: EEMD), which have a 0.29% and 0.49% expense ratio, respectively.
SPDV tries to reflect the performance of the S&P 500 Dividend and Free Cash Flow Yield Index, which targets attractively valued U.S. large cap stocks that exhibit both a high dividend yield and sustainable dividend distribution characteristics. As of the end of October, the underlying index showed a 3.83% dividend yield.
Top sector weights include materials 10.8%, information technology 10.3% and industrials 10.2%. Top holdings include CF Industries Holdings 2.5%, AbbVie 2.5% and Caterpillar 2.3%.
EEMD tries to reflect the performance of the S&P Emerging Markets Dividend and Free Cash Flow Yield Index, which targets attractively valued emerging market stocks that exhibit both a high dividend yield and sustainable dividend distribution characteristics. As of the end of October, the underlying index showed a 5.55% dividend yield.
Top sector weights include industrials 9.8%, real estate 9.6% and energy 9.6%. Top components include BAIC Motor Corp. 2.4%, Mobile TeleSystems 2.3% and China Vanke 2.2%.
“We are excited to enter the ETF market,” Lance McGray, Managing Director, Head of ETF Product at AAM, said in a note. “For nearly two decades AAM has offered investors innovative income generating solutions and these ETFs are the most recent addition to our diverse product suite.”
Both strategies focus on a way to balance current cash flow with future capital growth by honing in on two key valuation indicators to identify sustainable dividend-paying stocks offering fundamental value, dividend yield and free cash flow yield.
“Reaching for the highest yielding stocks is not always the best course of action,” McGray added. “Just as important as the actual dividend yield is the sustainability of that dividend. In our opinion, Free Cash Flow yield is an ideal indicator of dividend sustainability, and when coupled with Dividend yield in the selection process, the result can be powerful. This may help investors not only meet their current cash flow needs, but also potentially provide future capital growth.”
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