SPYD - PEY: Should You Buy This 4.80% Dividend-Yielding ETF?

2023-05-08 02:17:57 ET

Summary

• PEY holds 50 companies across all size segments that have increased dividends for ten consecutive years. I expect a 4.80% yield, and PEY has attracted $1.4 billion in AUM.
• A high yield is virtually guaranteed, making it suitable for income-only investors. However, there are flaws in the selection process that make it inappropriate for those looking for capital gains.
• Despite the dividend increase screen, PEY's profitability score is lower than most other high-dividend ETFs. Even after the March reconstitution, PEY is still 8% Regional Banks.
• Its largest sector exposure area, Utilities, is also under pressure. Many small- and mid-cap Utility stocks missed analyst expectations this quarter, while historic rate increase requests hang in the balance.
• PEY has great ten-year returns, but my annual performance rankings table highlights the inconsistency. There are too many concerns to issue PEY a buy rating at this time.

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