A Possible Star Among New Dividend ETFs
There is no shortage of thirst for income and yield among investors. Nor is there are a dearth of available ETFs with which to quench that thirst as fund sponsors have met investors’ desire for income products with a spate of new dividend ETF introductions over the past year. [State Street Readies New Global Dividend ETF]
Investors have responded by pouring $3.4 billion into dividend ETFs in April alone to bring the year-to-date inflow total to dividend funds to $10.9 billion, according to BlackRock.
One of the new dividend ETFs that is grabbing a slice of the inflow pie is the Global X SuperDividend U.S. ETF (DIV) . DIV debuted in mid-March as the U.S. equivalent of the Global X SuperDividend ETF (SDIV) . Since crossing the $100 million in assets under management level last summer, SDIV has seen its AUM total surge to $667.2 million, according to Global X data.
DIV is not there yet, but the new ETF is off to a fine start, having hauled in $38.4 million in assets in less than three months of trading. Not only has DIV returned 4.7% since inception, but the fund features a 30-day SEC yield of 6.22%, [A New High Dividend, Low Volatility ETF]
The new dividend ETF “represents a compelling argument for a portion of a diversified income portfolio that is seeking sector exposure to high yield equity and alternative investments,” said David Fabian for Minyanville.
As SDIV does with its 100 holdings, DIV takes an equal-weight approach its 50 constituents. While DIV does feature plenty of exposure to common stocks via familiar dividend-paying sectors (utilities, telecommunications and consumer staples combine for 44% of the ETF’s weight), the fund offers investors an avenue for accessing higher-yield alternative asset classes such as REITs and MLPs.
REITs and MLPs combine for 42% of DIV’s weight, helping boost the fund’s yield well beyond what investors will find with ETFs focused primarily on U.S. common stocks.
DIV’s top-10 holdings include W.P. Carey (WPC), Niska Gas Storage Partners (NKA) and Lorillard (LO). The average yield on those stocks is 6.3%.
“It is small additions like this that will help you combat the forces of inflation as well as add to your spendable cash flow,” Fabian added. “The one pitfall is the likelihood of additional volatility in comparison to typica l blue chip stocks.”
DIV, which hit a new high Wednesday before turning lower, has an annual expense ratio of 0.45%.
ETF Trends editorial team contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.
