Expanding on its dividend theme, Global X Funds launched a new ETF that selects quality dividend payers taken out of the S&P 500.
On Tuesday, Global X rolled out the Global X S&P 500 Quality Dividend ETF (Cboe: QDIV), which has a 0.35% expense ratio.
The Global X S&P 500 Quality Dividend ETF tries to reflect the performance of the S&P 500 Quality High Dividend Index, which is comprised of the top S&P 500 companies that exhibit high quality and dividend yield characteristics and equally weighted. Each company’s quality score is derived from its return-on-equity, accruals ratio, and financial leverage ratio.
“For Q2 2018 alone, S&P 500 companies issued a record $111.6 billion in dividends, and 216 of its components increased their cash payments by 13.55 percent on average,” Vinit Srivastava, Managing Director, Product Management at S&P Dow Jones Indices, said in a note. “As dividends reach record levels, a need for equity income can be combined with a selection of the higher-quality companies issuing those dividends, which the S&P 500 Quality High Dividend Index can provide.”
Related – Q2 Market Review: Equities, Treasuries, Oil, Gold & Crypto
A Quality Screen With Dividend Yield
Combining a quality screen with dividend yield, the ETF aims to provide access to companies that are more likely to sustain dividends throughout various economic environments.
“The steady rise of interest rates has created a dilemma for income-seeking investors, as bond yields finally become more attractive, but may be coupled with a loss of principal as rates continue to rise,” Jay Jacobs, director of research at Global X, said ina note. “With QDIV, we are excited to offer a dividend strategy for investors that has the potential both provide quality income and appreciate in value in a strengthening economy.”
Current top holdings include CA Inc 1.5%, Campbell Soup 1.5%, Assurant 1.4%, Comcast 1.4% and Kraft Heinz 1.3%.
Sector weights include consumer discretionary 21.2%, consumer staples 14.2%, information technology 12.1%, financials 11.0%, industrials 10.8%, energy 9.6%, real estate 7.5%, health care 6.3%, materials 4.6% and telecom services 2.5%.
For more information on new fund products, visit our new ETFs category.