"Dividend Dogs" Fund Barks its Way to $1 Billion in Assets

By Todd Shriber, ETF Trends

With low interest rates and anemic yields on U.S. Treasuries forcing investors to expand their yield-generating horizons, 2014 has been another strong year for inflows to dividend exchange traded funds.

The ALPS Sector Dividend Dogs exchange traded fund (SDOG) proves as much. SDOG, which is nearly two and a half years old, joined the $1 billion in assets under management club this week. SDOG tries to reflect the performance of the S-Network Sector Dividend Dogs Index, which applies the “Dogs of the Dow Theory” on a sector-by-sector basis using the S&P 500 with a focus on high dividend exposure.

As has been seen over the years with a plethora of ETFs, equal-weighting works and it is working with SDOG. SDOG’s sector weights range from 8% for industrials to 11.7% for financial services.

Although SDOG is underweight health care, the S&P 500’s top sector this year, by over 400 basis points relative to the benchmark U.S. index, the dividend ETF has returned 13.3% this year. That is good enough to be ahead of the S&P 500.

SDOG’s 10% weight to utilities, the second-best S&P 500 sector this year, has helped. Though not excessive compared to some other dividend ETFs, SDOG’s utilities allocation has been enough to contribute to the ETF’s upside. A 10% utilities weight is more than triple the S&P 500’s allocation to the sector.

None of SDOG’s holdings command weights in excess of 2.2%. The ETF’s top-10 holdings, which combine for just 21.1% of the ETF’s weight include Dow components DuPont (NYSE: DD) and Verizon (NYSE: VZ) along with Altria (NYSE: MO), Lockheed Martin (NYSE: LMT) and Reynolds American (NYSE: RAI).

SDOG has a dividend yield of 4.04%.

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ALPS Sector Dividend Dogs Fund (SDOG) a component of the D2 Capital Management Multi-Asset Income Portfolio. Current yield on the portfolio is 4.92% and year to date the portfolio is up 9.21% (as of 24 November 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.