SPDR S&P Dividend ETF (SDY): 20 years of rising dividends

By J. Royden Ward, Chief Analyst, Cabot Benjamin Graham Value Investor
From Cabot Wealth Advisory 10/21/14 Sign up for Cabot Wealth Advisory—it’s free!

Nine years ago, State Street Global Advisors created an ETF (exchange-traded fund) to track all the companies in the S&P (Standard & Poor’s) 1500 Index that have raised their dividends every year for the past 20 years. The objective of the ETF is to include companies that have increased their dividends consistently. Out of the 1,500 companies in the index, only 96 qualify!

SPDR S&P Dividend ETF (SDY)
is well diversified with risk spread out over 96 holdings. The largest position consumes only 2.81% of the total portfolio. The 10 largest holdings in order of size are: HCP, AT&T, Consolidated Edison, People’s United Financial, National Retail Properties, Target, Procter & Gamble, Clorox, Sysco and PepsiCo.

The five largest sectors are: Financials, Consumer Staples, Industrials, Utilities and Materials. SDY is a great substitute for bonds because of its 2.4% yield and steady performance. The price to earnings ratio, based on current EPS (earnings per share) of the stocks contained in the ETF is 17.7, and the price to book value ratio is 2.54. Both ratios are reasonable, and the beta (a measure of stock price volatility) is below average at 0.77. Management fees total 0.35%.

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