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SPHD: This 4.95%-Yielding ETF Offers Better Downside Protection In A Bear Market

Published Thu, 25 Jul 2019 06:03:44 -0400 on Seeking Alpha

ETF Overview
The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) focuses on large cap high dividend yield and low volatility stocks. This fund tracks the S&P 500 Low Volatility High Dividend Index. As the name of the ETF suggests, the fund selects its stocks based on its dividend yield, and stock volatilities in the past year. However, these are past information that may not accurately reflect future earnings and dividend growths. Because of its inferior growth outlook, its fund performance generally lagged the S&P 500 Index. However, it may provide better downside protection as it has lower forward P/E valuation than the S&P 500 Index. Therefore, it may be a good choice if an economic downturn is not far away.
Data by YCharts
Fund Analysis
Selection criteria only focus on past data
SPHD’s portfolio of stocks is selected based on past data. The ETF’s portfolio is constructed by picking the 75 highest dividend yield stocks from S&P 500 Index. The index ranks these 75 stocks and removes the most volatile 25 stocks (based on past year stock performance) from the list. While SPHD’s portfolio of stocks include high dividend yield stocks with low volatility, it does not guarantee future performance. In other words, future dividend cuts are still possible. Here, we will explain why.
First, high dividend yield exists for a reason. The stock may pay a much higher portion of its earnings as dividend to its shareholders. This may... Read more


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