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SDIV: This 9.4%-Yielding ETF Is Not Worth Your Investment

Published Thu, 11 Jul 2019 10:53:45 -0400 on Seeking Alpha

ETF Overview
Super Dividend ETF (SDIV) focuses on 100 of the highest-yielding stocks in the world. However, SDIV’s selection methodology has resulted in lower-quality companies in its portfolio. Therefore, the fund tends to underperform in both a bear and a bull market. Although investors get an attractive dividend with a high dividend yield, its total return over the long-term is not attractive. Therefore, we recommend investors seek opportunities elsewhere.

Data by YCharts
Fund Analysis
Portfolio construction ensures high dividend yields but may include lower quality companies
SDIV constructs its portfolio by picking the 100 highest yielding stocks from a list of stocks in the world that meet the minimum liquidity requirement. These 100 stocks are equally weighted to prevent exposure to one single stock. The index also reviews the portfolio every quarter to ensure the dividend outlook of the stocks included are not negative. If there was a dividend cut to a stock, or if the dividend outlook turned negative, this stock will be removed and replaced with the next highest yielding stock.
For income investors, the good side of this strategy is obvious. The dividend yield of this ETF will remain very high as the portfolio is reviewed and rebalanced every quarter. However, there are often reasons why a stock will have a high dividend yield. The first reason is that the stock may have a high payout ratio as the company pays out most of its earnings to its... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
VANGUARD HIGH DIVIDEND YIELD ETF 89.75   0.0 0.00 0.00 2.79


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