Active ETFs with capable management have a knack for locating stocks with earnings efficiency. A prime example is the SmartETFs Dividend Builder ETF (DIVS) and its largest holding, Anta Sports Products.
The Chinese sports equipment company comprises about 5% of the fund’s holdings as of 6/29. A closer look under the hood reveals a company with potent earnings growth and an eye toward efficiency.
That efficiency translates to future dividends growth, which is good news for any fixed income investor. For DIVS, it simply adds to its list of holdings that home in on quality dividends.
“ANTA Sports Products has a three-year median payout ratio of 32%, which implies that it retains the remaining 68% of its profits,” a Simply Wall Street analysis said. “This suggests that its dividend is well covered, and given the decent growth seen by the company, it looks like management is reinvesting its earnings efficiently.”
In the meantime, its stock performance hasn’t been too shabby either, especially within the last few months.
“ANTA Sports Products has had a great run on the share market with its stock up by a significant 40% over the last three months,” Simply Wall Street said further. “Given the company’s impressive performance, we decided to study its financial indicators more closely as a company’s financial health over the long-term usually dictates market outcomes.”
A Discerning Dividend ETF
DIVS is an actively managed dividend growth strategy that seeks discerning, dividend-paying companies that have provided an inflation-adjusted cash flow return on investment of at least 10% in each of the last 10 years. The ETF invests in approximately 35 dividend-paying companies globally.
The SmartETFs Dividend Builder ETF seeks a moderate level of current income and consistent dividend growth at a rate that exceeds inflation by targeting quality companies at attractive valuations. And of course, capture exposure to the aforementioned ANTA Sports Products, which analysts are liking at present.
“In total, we are pretty happy with ANTA Sports Products’ performance,” the Simply Wall Street article noted. “In particular, it’s great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. The latest industry analyst forecasts show that the company is expected to maintain its current growth rate.”
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