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SDIV: 3 Factors Why Underperformance Will Continue In Global X SuperDividend ETF

Published Mon, 17 Feb 2020 09:52:48 -0500 on Seeking Alpha

SummaryGlobal X SuperDividend ETF (SDIV) boosts an optically attractive dividend yield of 9%.
Heavy exposure to small cap value stocks has been the culprit of SDIV's subpar total return.
SDIV's dividend payout growth has stagnated since inception with many of top 25 holdings having reported dividend cuts in the past 3 years.
Persistent U.S. dollar strength on safe haven flows will be an additional drag on SDIV's international exposure.
Over the past decade, the following trifecta has generally been the recipe for success in terms of generating superior long-term returns in the stock market :
Location: U.S. Size: Large Style: Growth A quick comparison between S&P 500 (SPY) vs. the rest of the world (VEU), Russell 2000 (IWM) and S&P 500 Value ETF (IVE) would suffice in demonstrating the above. In that sense, it is perhaps not far-fetched to say that Global X SuperDividend ETF (SDIV) has been the ultimate contrarian investment vehicle based on the fact that SDIV is heavily concentrated in small caps and value stocks.
Market Cap Exposure SDIV Large (>12.9B) 7.07% Mid (>2.7B) 32.08% Small (>600M) 56.55% Micro (<600M) 4.31%
Source: ETF.com
Stock Style Exposure SDIV Value 86.27% Blend 13.71% Growth 0.00%
Source: YCharts
Not to mention SDIV also has substantial non-U.S. exposure, which we will get into more later. The strategy's resulting performance since inception has been rough to say the least, with its price having suffered a -30% decline. Even on a total return basis, it has clearly underperformed the broader market by a massive margin with a subpar 30% over a 10-year period:

The recent steep price decline in SDIV to all-time lows has led to its dividend yield rising to a staggering 9%, which easily exceeds its high dividend ETF peers.

High Dividend ETF Comparison SDIV DIV VYMI HDV Name Global X SuperDividend ETF Global X SuperDividend US ETF Vanguard Intl Hi Div Yld Idx ETF... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
VECTOR GROUP 13.52   24.1 0.56 1.60 12.35
INVESCO MORTGAGE CAPITAL 15.18   0.0 -1.01 1.80 11.80
CHIMERA INVESTMENT 19.57   21.5 0.91 2.00 10.23
MACQUARIE INFRASTRUCTURE 39.63   34.2 1.16 4.00 10.04
ARBOR REALTY TRUST 12.77   9.1 1.40 1.16 9.21
PENNYMAC MORTGAGE INV TRUST 22.24   9.5 2.35 1.88 8.50
ARTISAN PARTNERS ASSET MANAGEMENT 28.63   11.6 2.47 2.40 8.44
SABRA HEALTHCARE REIT 22.49   204.4 0.11 1.80 8.28
KITE REALTY GROUP TRUST 15.92   0.0 -0.27 1.27 8.07
LADDER CAPITAL 17.14   12.1 1.42 1.36 7.96
STARWOOD PROPERTY TRUST 24.39   18.5 1.32 1.92 7.95
REDWOOD TRUST 17.17   14.4 1.19 1.20 7.06
COSTAMARE 6.42   23.8 0.27 0.40 6.60
OMEGA HEALTHCARE INVESTORS 41.16   32.4 1.27 2.64 6.57
SPDR S&P 500 ETF 301.29   0.0 0.00 5.42 1.82


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