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Shareholder Yield: A Better Approach for Dividend Investors?

Eric Dutram
  • (0:45) - Shareholder Yield: Have Dividends Fallen Out of Favor?
  • (4:15) - Does Shareholder Yield Tilt Towards Value?
  • (5:35) - What Are the Income Payouts For This Strategy?
  • (8:30) - SYLD Overview: Weighting Method and Sector Breakdown
  • (12:50) - FYLD Overview: International Exposure
  • (16:30) - Emerging Markets: EYLD
  • (18:00) - What's In The Future For Cambria Investment Management
  • (20:00) - Episode Roundup: Podcast@Zacks.com

Dividend investing is an ever-popular topic, and for most investors, it begins and ends with a look at how much a company pays out each year relative to its share price. However, this simplistic approach of only inspecting the dividend yield could be overlooking some key areas that are actually very important to consider.

Chief among these are considering other financial activities, such as share repurchases or debt retirement, and the impact these data points have as well. And, if you combine all of these together, you get a much more complete picture of a company’s true yield prospects, in what is often referred to as ‘shareholder yield’.

Why Shareholder Yield?

To explain how and why to use this concept in a bit greater detail, we have Meb Faber, the CIO of Cambria Investments to discuss the topic with us on this week’s Dutram Report. Meb literally wrote a book on shareholder yield, so it is pretty safe to say he knows a thing or two about the concept and why it might often a more holistic approach for yield-focused investors.

Meb goes over the main points of this strategy, how income investors might feel about the approach, and the ever-increasing popularity of share buybacks these days. Meb also makes the case for why this technique might be worth investigating, and the importance of free cash flow to great outcomes too.

We then discuss the main way for investors to target this market in ETF form with the Shareholder Yield ETF (SYLD), and how this portfolio is constructed. Top holdings right now include Northrop Grumman (NOC), Green Dot (GDOT), and Southwest Airlines (LUV), but check out the podcast for additional information on how this actively-managed portfolio is built and maintained.

The Rest of the Lineup

We also talk about how this strategy works internationally. There are some important considerations to keep in mind for a foreign approach, including which countries tend to be more well-represented for this metric in their Foreign Shareholder Yield ETF (FYLD), and if there are enough quality companies in the emerging world when using this technique for their Emerging Market Shareholder Yield ETF (EYLD) too.

Finally, we also discuss two of Cambria’s other funds, and what these might bring to the table. The company has a Tail Risk ETF (TAIL) which invests in out of the money put options to mitigate downside risks, while it also has a Core Equity ETF (CCOR) that uses options trading to produce capital appreciation. But check out the podcast for additional information on this duo, as well as the shareholder yield lineup from Cambria.

Bottom Line

But what do you think about shareholder yield? Make sure to write us in at podcast @ zacks.com or find me on Twitter @EricDutram to give us your thoughts on this, or anything else in the fund market.

But for more news and discussion regarding the world of investing, make sure to be on the lookout for the next edition of the Dutram Report (each and every Thursday!) and check out the many other great Zacks podcasts as well!

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Southwest Airlines Company (LUV) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
CAMBRIA-EMG SY (EYLD): ETF Research Reports
Green Dot Corporation (GDOT) : Free Stock Analysis Report
CAMBRIA-FRN SHR (FYLD): ETF Research Reports
CAMBRIA SH YLD (SYLD): ETF Research Reports
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