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SPDR S&P Euro Dividend Aristocrats ETF: A Comprehensive Fund For Euro Area Dividend-Paying Stocks

Published Mon, 15 Jul 2019 23:19:43 -0400 on Seeking Alpha

Investment Thesis
Dividend investors looking for exposure to undervalued dividend stocks within the euro area should consider the SPDR S&P Euro Dividend Aristocrats ETF (SPEUHDAN), which to some extent is the European equivalent of the American SDY; the fund, which offers relatively high and stable income and a tilt towards undervalued stocks, plus tax efficiency in collecting the dividends by virtue of being domiciled in Ireland, has beaten the European market since its inception in 2012. Nevertheless, investors should be careful of the less-stringent quality indicators that the fund applies compared to SDY; this, combined with its value approach, may bring additional risk compared to a market cap-based ETF.
The S&P Euro High Yield Dividend Aristocrats Index
The SPDR S&P Euro Dividend Aristocrats ETF tracks the performance of the S&P Euro High Yield Dividend Aristocrats Index, which is made of the 40 highest yielding stocks in the eurozone that have raised or maintained their dividends for at least 10 years; stocks are weighted by yield and not market cap, which gives this ETF a value investing approach. The 10-year dividend record, which would be quite lenient for American standards, is reinforced by a payout/earnings requirement of no more than 100%, and a minimum market capitalization of 1 billion USD; in addition, the index caps each stock at a maximum of 5%, and each sector at 30%.
The largest sector in the fund is the industrial one, closely... Read more