The ALPS REIT Dividend Dogs ETF (NYSEArca: RDOG) is one of the newest real estate investment trust (REIT) ETFs on the block, having recently debuted as the replacement for the ALPS ETF Trust Cohen & Steers Global Realty Majors ETF (NYSEArca: GRI).
Thew new RDOG tracks the S-Network REIT Dividend Dogs Index, a benchmark that’s similar those found on ALPS’ other dividend dogs ETFs, including the popular ALPS Sector Dividend Dogs ETF (NYSEArca: SDOG), ALPS International Sector Dividend Dogs ETF (NYSEArca: IDOG) and the ALPS Emerging Sector Dogs ETF (NYSEArca: EDOG).
RDOG “screening is isolated at the REIT segment level, providing high dividend exposure by selecting the five highest-yielding REITs in nine REIT segments,” according to ALPS. “The new ETF includes a Technology REIT segment to help capture the strong growth in wireless towers and data centers, which can also act as a defensive attribute to the fund and excludes the Mortgage REIT segment to avoid REITs most sensitive to interest rates and credit spreads.”
Looking For More Attractive Options
As the Fed eases back on policy tightening, the payouts on U.S. government bonds have also declined, pushing investors to look for more attractive options in the stock market such as REITs that typically deliver bond-esque returns and could potentially bring higher yields.
RDOG features exposure to nine REIT segments and its technology REIT weight of 11.34% is among the largest in the REIT ETF space. The new fund also has exposure to healthcare, office and retail REITs, among others.
“When we looked across the existing REIT space, we noticed some large segment biases that may expose REIT investors to outsized risks,” said Andy Hicks, Senior Vice President and Director of ETF Portfolio Management & Research at ALPS. “With RDOG’s equal-weighting approach to both the high yielding REITs and nine segments, we believe investors can access dividend-based income and total returns while reducing overall risk.”
RDOG also excludes mortgage REITs to mitigate the fund’s interest rate and credit risk and it also has an avenue for ensuring steady dividend as it mandates “constituent REITs must have Trailing Twelve Month (TTM) Funds From Operations per share (FFOPS) greater than TTM Dividend Payouts per share (DPS).”
RDOG charges 0.35% per year, or $35 on a $10,000 investment, down from the 0.55% charged by the old GRI.
For more information on real estate investment trusts, visit our REITs category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
