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The Naked Truth On These High Dividend ETFs

Published Tue, 03 Apr 2018 09:14:24 -0400 on Seeking Alpha

After all, you only find out who is swimming naked when the tide goes out. - Warren Buffett (Berkshire Hathaway letter 2002)
In a low volatility bull market, it is difficult to separate one ETF from another based on performance. A certain fund might be a strong performer simply due to assuming additional risk. Only when the markets are in trouble, do you spot that the fund was skinny dipping.

This is one of the reasons why I encourage looking carefully into the methodology of each ETF and the construction rules instead of just monitoring a group of ETFs for a few years and picking among the highest performers with the lowest expense ratio. That can be a recipe for trouble.
Below is a chart comparing the year-to-date performance of various high dividend ETFs.

AAM S&P 500 Sector High Dividend ETF (SPDV) ALPS Sector Dividend Dogs ETF (SDOG) Vanguard High Dividend Yield ETF (VYM) iShares Select Dividend ETF (DVY) SPDR Dividend ETF (SDY) Schwab U.S. Dividend Equity ETF (SCHD) To be perfectly honest, a snapshot of a few months of price performance is not enough history to make any conclusive remarks. Still, it is of interest. Looking into the methodologies, what might be some of the risks not readily apparent?
Cap-Weighting Scheme Funds which are cap-weighted weight towards the most expensive stocks. If you want the largest company or firm, you should use fundamentally weighted funds. If you assume that prices are noisy and revert to their true values... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ISHARES DOW JONES SELECT DIVIDEND INDEX FUND 96.69   0.0 0.00 3.37 3.54
VANGUARD HIGH DIVIDEND YIELD ETF 85.24   0.0 0.00 0.00 2.98
SPDR S&P DIVIDEND ETF 98.30   0.0 0.00 2.42 2.50

ISHARES DOW JONES SELECT DIVIDEND INDEX FUND - DVY
ISHARES DOW JONES SELECT DIVIDEND INDEX FUND - DVY  


Older articles featuring Ishares Dow Jones Select Dividend Index Fund (DVY):
Dividends By The Numbers In July 2019
NOBL: Stick With Dividend Aristocrats As Economic Fears Mount
Income Investing And The Changing Yield Curve
Dividend Growth ETF Overlap
Vanguard Dividend Appreciation ETF: Steady Dividends In A Low-Cost Fund
FDVV: A High Dividend ETF For A Low Interest Rate Environment
Do Dividend-Paying Stocks Make Better Investments?
Paying My Bills With Dividends - Q4 2018 Update
The Best Dividend Stocks: What To Look For?
The Growing Risk To Dividend-Focused Strategies

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