RDVY holds 51 stocks and about 51% of the ETF’s combined sector exposures are financial services or technology stocks. Industrial and consumer discretionary names combine for a third of the ETF’s weight, giving RDVY a highly cyclical feel.
“While long-term dividend payers would certainly qualify, it opens the doors for many companies who have only recently started consistently growing their dividends. RDVY also layers on screens for earnings growth, cash-to-debt and payout ratios, so it tries to include only companies that can be reasonably expected to continue growing their dividend, but the history for many companies is limited at best,” reports ETF Daily News.
Companies that have consistently increased dividends tend to be high in quality and show a strong potential for growth. These dividend growers have been able to withstand periods of market duress, exhibiting smaller drawdowns as investors sold off riskier assets, while still delivering strong returns on the upside, to generate improved risk-adjusted returns over the long haul.
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