Published Sun, 28 Jun 2020 21:52:49 -0400 on Seeking Alpha
Seeking AlphaETF AnalysisSPDR Portfolio S&P 500 High Dividend ETF: Portfolio Design IssuesJun. 28, 2020 9:52 PM ET|| About: SPDR Portfolio S&P 500 High Dividend ETF (SPYD), Includes: DIV, RDIV, SPHDby: Michael A. Gayed, CFAMichael A. Gayed, CFA The Lead-Lag ReportAnticipate Corrections and Volatility with Award Winning ResearchSummaryThe portfolio design of SPDR Portfolio S&P 500 High Dividend ETF is such that it cannot take advantage of growth stocks, which are responsible for the melt-up.
The COVID-19 disruption is gathering strength after the states reopened, and it may derail operations of economy-dependent stocks that this ETF is focusing on.
I am neutral on the ETF, but have created a strategy that can help.
We don’t have to be smarter than the rest, we have to be more disciplined than the rest. – Warren Buffett
The SPDR Portfolio S&P 500 High Dividend ETF (SPYD) has been a major disappointment for its loyal and long-term investors. There are a couple of reasons for its underperformance – one, it has been chasing companies with high dividend yields whereas the market has been rewarding growth stocks, and two, the COVID-19 disruption is now choking the profits of dividend-paying companies.
I am neutral on this ETF and feel there are other exciting opportunities to consider. Way back in December 2019, I had benchmarked the high-dividend stock index with preferred shares in a tweet and in The Lead-Lag Report. It was clear even back then that preferred stocks outperformed the index by a decent margin.
Image Source: Twitter
Despite its underperformance, many dividend investors prefer ETFs such as SPYD. Here is some more information for them to chew upon.
SPYD’s peer group includes ETFs such as Global X Super Dividend U.S. ETF (DIV), Oppenheimer S&P Ultra Dividend Revenue ETF (RDIV), and Invesco S&P 500 High Dividend Low Volatility Portfolio ETF (SPHD). The entire group has underperformed from... Read more