The ALPS Sector Dividend Dogs (SDOG) exchange traded fund was introduced just over two years ago and has since amassed over $800 million in total assets.
This ETF takes a unique approach by selecting five holdings from each of the ten sectors within the S&P 500 Index with the highest dividend yields. Each holding is then equal weighted so that every company has a similar pull on the total return of the fund. The end result is a portfolio of 50 large-cap stocks that includes a high degree of diversification among every S&P sector.
Often times dividend funds are skewed towards specific area of the market such as utilities, consumer staples, or energy companies. However, SDOG is provides you with the opportunity to own equal segments of the economy in one single package. In addition, because they select from some of the largest and most liquid stocks in the world, the holdings are generally high quality companies. This includes well-known dividend payers such as: Intel Corp (INTC), Lorillard Inc (LO), and AT&T (T).
SDOG has a current 30-day SEC yield of 3.32%, and has returned nearly 25% over the last 52-weeks with dividends factored back in.
This outperformance in SDOG is likely due to larger exposure to technology, healthcare, and telecommunications sectors, which have performed strongly over that time frame.
Nevertheless, SDOG should certainly be on your watch list of dividend paying funds that include a reasonable expense ratio, higher than average yield, and unique index construction methodology. This fund can certainly be used as a core holding within the context of a conservative income portfolio to gain market correlation and yield.
The original Dogs of the Dow Theory focuses on selecting 10 of the highest dividend paying stocks in the Dow Jones Industrial Average on an annual basis. SDOG does an admirable job of taking that one step farther to include a more diversified and balanced subset of companies.
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The ALPS Sector Dividend Dogs (SDOG) is a component of the D2 Capital Management Multi-Asset Income Portfolio. Current yield on the portfolio is 5.35% and year to date the portfolio is up 12.37% (as of 3 September 2014).Disclosure: I own the D2 Capital Management Multi-Asset Income Portfolio
The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.
The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville. The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.
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