SMDV also delivers less volatility than traditional small-cap benchmarks. Over the past three years, the ETF’s average annualized volatility has been significantly less than that of the Russell 2000 Index and the S&P SmallCap 600 Index. During that period, SMDV outperformed the Russell 2000.
Dividend growth, particularly with smaller companies, can be a sign of the quality factor. Valuing high quality value is particularly important as bull markets enter their waning stages, as some market observers believe the current bull market is doing. In the early stages of bull markets, lower quality companies see their shares soar. However, as the bull matures, investors often exhibit a preference for higher quality fare with more compelling valuations.
Over 23% of SMDV’s 59 holdings hail from the utilities sector while the industrial and financial services sectors combine for over 27% of the ETF’s roster.
For more information on dividend-paying stocks, visit our dividend ETFs category.