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Should SPDR Portfolio S&P 500 High Dividend ETF (SPYD) Be on Your Investing Radar?

Launched on 10/21/2015, the SPDR Portfolio S&P 500 High Dividend ETF (SPYD) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.

The fund is sponsored by State Street Global Advisors. It has amassed assets over $8.34 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 3.65%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Utilities sector--about 19.50% of the portfolio. Energy and Financials round out the top three.

Looking at individual holdings, Valero Energy Corporation (VLO) accounts for about 1.86% of total assets, followed by Bristol-Myers Squibb Company (BMY) and Marathon Petroleum Corporation (MPC).

The top 10 holdings account for about 14.33% of total assets under management.

Performance and Risk

SPYD seeks to match the performance of the S&P 500 High Dividend Index before fees and expenses. The S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend-paying securities listed on the S&P 500 Index, based on dividend yield.

The ETF has added roughly 4.15% so far this year and was up about 10.14% in the last one year (as of 08/16/2022). In the past 52-week period, it has traded between $38.41 and $45.45.

The ETF has a beta of 0.97 and standard deviation of 29.02% for the trailing three-year period, making it a medium risk choice in the space. With about 82 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR Portfolio S&P 500 High Dividend ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SPYD is a great option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $55.49 billion in assets, Vanguard Value ETF has $102.86 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.




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SPDR Portfolio S&P 500 High Dividend ETF (SPYD): ETF Research Reports
 
Bristol Myers Squibb Company (BMY): Free Stock Analysis Report
 
Valero Energy Corporation (VLO): Free Stock Analysis Report
 
Marathon Petroleum Corporation (MPC): Free Stock Analysis Report
 
Vanguard Value ETF (VTV): ETF Research Reports
 
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
 
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