Published Wed, 06 May 2020 11:56:15 -0400 on Seeking Alpha
PEY invests in high yield dividend stocks in the U.S that have over 10 consecutive years of dividend growth.
The fund has a high exposure to defensive sectors but lacks exposure to technology stocks.
The fund pays an attractive 6.2%-yielding dividend but its total return is lower than the S&P 500 Index in the long-term.
Invesco High Yield Equity Dividend Achievers ETF (PEY) owns a portfolio of high yield dividend stocks that have increased their dividends for at least 10 consecutive years (with a minimum market capitalization of $1 billion). The fund has a high exposure to defensive sector but has limited exposure to growth sectors such as technology sector. This is evident in the fact that its total return has lagged the S&P 500 Index and other dividend quality funds. Therefore, investors may want to seek opportunities elsewhere.
Data by YChartsFund Analysis
PEY include stocks with 10+ years of dividend growth
The main stock selection criteria for PEY is to find 50 highest-yielding stocks (with a market capitalization over 1 billion) that have raised their dividends for 10 consecutive years. The theory behind choosing stocks with over 10 consecutive years of dividend growth is to reduce the risk as these companies selected are generally companies that have been through different stages of the economic cycle and are still able to commit to grow their dividends. Below is a chart that shows the growth of the dividends of the top 10 holdings of PEY’s portfolio. As can be seen from the chart, the range of dividend growth for PEY’s top 10 holdings in the past 10 years is wide, ranging between 6.78% and 310%.
Data by YCharts
We like its exposure to defensive sectors
The outbreak of COVID-19 is causing a lot of challenges both in the U.S. and globally. There is a lot of uncertainties as no one really knows how long the pandemic will last and whether there will be multiple waves of pandemic in the next... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|SPDR S&P 500 ETF||301.29||0.0||0.00||5.42||1.82|
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