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Dividend ETF’s 10-Year Track Record Beats Market


First Trust Value Line Dividend Index Fund (FVD) has delivered a 10-year annualized return of 9.2% compared with 7.4% for the S&P 500, according to Morningstar.

The ETF’s market-beating performance hasn’t gone unnoticed by investors as the fund has grown to more than $720 million of assets.

Dividend ETFs have become a popular tool for income-seeking investors in a low interest rate environment.

“While the field has become more crowded over the past few years, FVD has distinguished itself for over a decade as an effective tool for investors seeking below-average volatility with above-average dividends,” said Ryan Issakainen, Senior Vice President and ETF Strategist at First Trust.

“The methodology of the index that FVD tracks is not focused on finding the highest dividend-paying stocks,” First Trust said. “Rather, the index looks for quality companies as determined by Value Line’s® safety rankings that have an above-average dividend yield when compared to the S&P 500 dividend yield.”

The ETF’s dividend index was designed by investment research firm Value Line. [Dividend ETF Dynamo]

FVD was paying a 30-day SEC yield of 2.68% at the end of August. The fund charges a net expense ratio of 0.70%.

The ETF has managed to outperform the S&P 500 over the past decade with lower volatility. FVD has a 10-year standard deviation of 12.83 versus 14.68 for the S&P 500, according to Morningstar. [ETF Focus: First Trust Value Line Dividend]

First Trust Value Line Dividend Index Fund

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.