PEP, MDT and IBM are considered attractively valued to CFRA equity analysts and their strong dividend records contribute to their above-average S&P Global Market Intelligence Quality Rankings.
These two metrics are key drivers of CFRA’s forward-looking rating of ETFs including Invesco Dividend Achievers (PFM 26 Overweight), SPDR S&P Dividend Aristocrats (SDY 94 Overweight) and Vanguard Dividend Appreciation Index (VIG 104 Overweight). All three hold MDT, IBM and PEP and other stocks with long records of dividend increases, but there are differences between the funds.
For example, VIG has 18% stakes in consumer staples stocks, higher than the 15% for both PFM and SDY, respectively. Yet, SDY has just a 3% stake in technology, considerably less the 13% and 12% of PFM and VIG, respectively. Meanwhile, though energy companies have cut dividends in the past, Exxon Mobil (XOM 83 ***) and Chevron (CVX 126 ****) are constituents in PFM and SDY that raised dividends in the first half of 2018. Yet, PFM has 11% in energy, but the equally weighted SDY has just 3%; VIG has no energy exposure.
These three dividend ETFs have ten-year performance records, but the asset management industry continues to launch new and often interesting products. For example, AAM S&P 500 High Dividend Value (SPDV 27 Marketweight), JPMorgan US Dividend (JDIV 26 Marketweight) and Oppenheimer Russell 1000 Yield Factor (OYLD 25 Marketweight) all launched in November 2017 and are rated by CFRA based on holdings analysis, expense ratio and other metrics.
The Stocks and ETF screening tool on MarketScope Advisor can help identify other equity income candidates.
Todd Rosenbluth is Director of ETF & Mutual Fund Research at CFRA.