FDVV - RDIV: 4.31% Expected Dividend Yielding ETF With Questionable Quality Features

2024-07-11 12:57:53 ET

Summary

• RDIV tracks the S&P 900 Dividend Revenue-Weighted Index, selecting 60 high-yield stocks after screening for dividend yield and dividend safety traps. The ETF has a 0.39% expense ratio.
• Despite this large fee, RDIV has an attractive 4.31% expected dividend yield and, by extension, has a P/E ratio among the cheapest in its category.
• Nevertheless, there are weaknesses to explore. The Index's screens quickly filter out many of the market's most profitable companies. I also have diversification, risk, and growth concerns.
• RDIV comes as advertised but is not well-rounded, so I have assigned it a neutral "hold" rating. This article includes a fundamental analysis comparison with SPYD, SCHD, FDVV, and VYM.

Investment Thesis

I last reviewed the Invesco S&P Ultra Dividend Revenue ETF ( RDIV ) on December 8, 2022, concluding that apart from delivering a high dividend yield, it's too unpredictable on other key factors to warrant a buy rating. Since that article was published, RDIV has gained 8.99%, a solid result compared to high-yield funds like the SPDR S&P 500 High Dividend ETF ( SPYD ) and the Schwab U.S. Dividend Equity ETF ( SCHD ) but lagging behind those in the 3% dividend yield range like the Fidelity High Dividend ETF ( FDVV ) and the Vanguard High Dividend Yield ETF ( VYM )....

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