CGDV - FDVV: All-Weather Dividend ETF Yielding 2.88% Remains A Buy

2024-06-05 13:27:08 ET

Summary

• Fidelity High Dividend ETF continues to perform well since my initial upgrade one year ago. The addition of low-yielding stocks like Apple and Nvidia contributes to the balanced approach I seek.
• The FDVV ETF's expected yield is steadily declining, now at 2.88%. However, I view this positively, as I'm careful not to sacrifice too much capital gain for only marginally higher income.
• Alternatives like SCHD used to feature sufficient earnings growth several years ago, which is how it managed to keep pace with SPY and deliver double-digit earnings growth. Unfortunately, that's changed.
• As forward-looking investors, we must acknowledge this changing landscape and seek investments that aren't too extreme. FDVV is the compromise ETF I believe will appeal to disappointed SCHD investors.

Investment Thesis

I last reviewed the Fidelity High Dividend ETF ( FDVV ) on February 27, 2024, where I listed its 3% dividend yield, low P/E, and high quality as reasons for my "buy" rating. Since my initial upgrade on May 28, 2023, FDVV has outperformed the Schwab U.S. Dividend Equity ETF™ ( SCHD ) by 13.13% and nearly matched the returns of the SPDR® S&P 500 ETF Trust ( SPY ), an impressive feat for a value ETF in a growth-favored market....

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