The ALPS Sector Dividend Dogs ETF (SDOG), a deep value portfolio, is a compelling offering in the current environment.
The pure value factor has continued to outperform growth in the current rising interest rate environment and is outpacing pure growth by an astounding amount year-to-date.
SDOG applies the “Dogs of the Dow Theory” on a sector-by-sector basis using the S&P 500 Index as its starting universe of eligible securities. SDOG provides high dividend exposure across 10 sectors of the market by selecting the five highest-yielding securities in each sector, according to SS&C ALPS Advisors. The fund tracks the S-Network Sector Dividend Dogs Index (SDOGX).
The fund maintains equal allocations to each of the 10 sectors, unlike many dividend-focused products, including the First Trust Morningstar Dividend Leaders Index Fund (FDL) and the iShares Core High Dividend ETF (HDV). The portfolio also consists of equal weighting for each component stock.
Equal weight strategies are favored for reducing concentration risk and enhancing diversification in a portfolio.
Year to date as of November 17, SDOG’s deep value portfolio has returned -3.27%, while the S&P 500 Index returned -17.19% during the same period.
Despite its outperformance, SDOG’s underlying index, the S-Network Sector Dividend Dogs Index, has a current P/E multiple of 10.76x, a notable discount to the S&P 500’s current P/E multiple of 18.74x as of the end of October. Additionally, the trailing twelve-month dividend yield for SDOGX is more than 2.7x that of the S&P 500 Index, according to SS&C ALPS Advisors.
SDOG has consistently been one of the most popular ETFs in ALPS’ range, accreting flows at a steady pace this year, garnering $102 million year to date as of November 17, according to VettaFi. SDOG has $1.3 billion in assets under management.
SDOG charges 40 basis points.
For more news, information, and strategy, visit the ETF Building Blocks Channel.
vettafi.com is owned by VettaFi, which also owns the index provider for SDOG. VettaFi is not the sponsor of SDOG, but VettaFi’s affiliate receives an index licensing fee from the ETF sponsor.