Published Fri, 19 Jun 2020 12:53:45 -0400 on Seeking Alpha
Global X Super Dividend U.S. ETF has underperformed its peers ever since it listed.
Most long-term investors in the ETF have lost capital even after accounting for dividend earned.
However, there are chances that the ETF will bottom out in the near-term.
Think of ETFs as the market's version of a wolf pack picking off and weeding out the slower and weaker active fund managers in the herd, those with consistently poor returns and high fees. - Vito J. Racanelli, Barron's
The Global X Super Dividend U.S. ETF (NYSEARCA: DIV) invests in low-volatility, dividend-paying companies operating in diversified sectors. As of June 17, 2020, DIV had invested 15% of its funds in industrials, 13.2% in real estate, 19.73% in energy, and 15% in utilities. The issue now is that these sectors experienced low volatility and had attractive dividend yields until the COVID-19 disruption landed.
Image Source: Seeking Alpha
After the COVID-19 impact scythed the market, these sectors went into a wildly volatile spin and became underperformers. Many stocks in these sectors have yet to recover despite the indices recouping most of their losses. The only sectors that held up against the virus were consumer-defensives (e.g., staples), communication, and to some extent, the consumer cyclical industry. Mercifully, 37% of DIV's capital was parked in these defensive sectors and that kind of stemmed the rot.
I am neutral on DIV as of now because of its past performance and the COVID-19 disruption, but consider it an ETF to track, and I'll explain why a little later. Meanwhile, here's some data to chew on:
Momentum v/s Dividend
Image Source: Trading View
In 2017, DIV was hovering around $26 levels. Between then and Feb 2020, its average price was about $24, and its current price as of June 17, 2020, is $15.85.
Now, let's talk about its dividends. DIV pays monthly dividends and has paid on an average $1.7 annually between 2017 and 2019. Its dividend has dipped... Read more