RDIV - RDIV: Generous Dividend Yield But High Turnover, Questionable Performance, A Hold

2025-04-24 21:27:49 ET

Summary

• RDIV offers exposure to a revenue-weighted portfolio of the S&P 900 constituents that were screened for high dividend yields.
• With a 4.9% weighted average DY of the portfolio, RDIV is a champion of calibrating inexpensive equity mixes. In part thanks to that, it has beaten IVV this year.
• Alas, its long-term performance has not been particularly successful, growth exposure is minimal, and weighted average dividend growth rates of its portfolio are hardly compelling.
• High turnover of 101% is another issue to pay attention to.
• And though there is a chance of RDIV beating IVV in 2025, I would abstain from creating a Buy thesis as it has too many evident weaknesses.

Do investors need smart beta when markets are going through the wringer? Views are polarized, but I believe that they more likely do. When correctly and, most importantly, timely applied, factors and/or their unorthodox combinations that either influence a portfolio's composition or its weighting schema can bolster returns, and solidly. Or at least protect investors from dismal drawdowns that less sophisticated, market cap-weighted portfolios can face.

One of the relevant examples here is that low volatility strategies, like the Invesco S&P 500® Low Volatility ETF ( SPLV ), are having something of a moment this year. And the iShares Core S&P 500 ETF ( IVV ) is obviously not....

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