Published Mon, 13 Feb 2017 08:29:54 -0500 on Seeking Alpha
ALPS Sector Dividend Dogs ETF (NYSEARCA: SDOG) has been around since July 2012. It is one of the best performing ETFs in the high dividend category. Currently, it has $2.07 billion of Assets Under Management. One of the major drawbacks for investors is its relatively high expense ratio of .40%. Despite the cost, SDOG delivered impressive absolute and risk-adjusted return over its 4.5 years of existence.
The only high dividend ETF that has outperformed SDOG in the last three years is PowerShares S&P 500® High Dividend Low Volatility Portfolio (NYSEARCA: SPHD), which by itself is worth a separate article. SDOG and SPHD have some similarities. They both own 50 stocks and source S&P 500 for the highest dividend paying stocks.
Source: ETF.com and Morningstar.com
The Dogs Theory
SDOG ETF is based on the Dogs of Dow theory which was publicized by Michael O'Higgins in 1991. The theory suggests investing in the 10 Dow Jones Industrials Average Index stocks with the highest dividend yield. The Dogs theory believes in these stocks' potential for price appreciation as market forces bring their yield into line with the overall market.
The Alps ETFs takes the Dogs theory one step further and expands it to the S&P 500 index. SDOG selects the highest dividend paying stocks from the S&P 500 index in their respective sectors.
The Underlying Index consists of 50 stocks with the highest dividend yield in each sector in the S&P 500 Index. The... Read more