On the lookout for dividends? You wouldn’t be the only one; investors are hungry for dividends and other current income opportunities to boost their equities portfolios, especially with so much uncertainty looming over markets entering 2023. Investors hunting for a dividend ETF might want to consider one ETF that just surpassed its 200-day simple moving average (SMA): the Franklin U.S. Low Volatility High Dividend ETF (LVHD).
LVHD hit $38.89 as trading closed on Wednesday, having passed its SMA of $38 earlier in the morning. It continued its upwards trajectory into Thursday, passing $39 at the start of trading as of press time. According to technical analysis, that presents a crossover moment and a buy opportunity for investors who believe that the recent price jump has enough fuel to keep climbing.
Its price increase may make sense when considering both its flows and the particular appeal of a low-vol dividend ETF. Each passing comment from the Fed has impacted markets looking for a sign, with the specter of further geopolitical tension in Eastern Europe and the possibility of COVID policy changes in China sources of a lot of upward and downwards movement.
LVHD looks to manage volatility by seeking what the strategy’s managers call “stable yield,” using technical inputs as well as fundamental factors to produce sustainable dividends. LVHD considers the volatility of prices and earnings in addition to yield, dropping about 50 to 100 names from its parent index, and weights them according to its stable yield framework.
The ETF tracks the QS Low Volatility High Dividend Index, seeing the largest net inflows of all of Franklin Templeton’s ETFs over the last four weeks, according to VettaFi, with $81 million. LVHD has also outperformed the ETF Database category average and the FactSet segment average over one month and three months, returning 5.73% and 2.37%, respectively.
LVHD charges 27 basis points for its exposure and offers a 2.62% annual dividend yield. That outperforms both averages tracked at VettaFi by almost 200 basis points each. For those investors looking for a dividend ETF but worried about volatility, LVHD might be a strategy worth keeping on the radar.
For more news, information, and analysis, visit the Volatility Resource Channel.
VettaFi is an independent publisher and takes responsibility for our edit staff, research, and postings. Franklin Templeton is not affiliated with VettaFi and was not involved in drafting this article. The opinions and forecasts expressed are solely those of VettaFi and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.