VIG - SDY: Avoid This Underperforming Dividend Growth Strategy ETF

2024-02-15 11:05:58 ET

Summary

• The SPDR S&P Dividend ETF invests in companies that have increased their dividend for at least 20 consecutive years.
• We highlight that the yield-weighted methodology has some disadvantages that may explain the fund's weak performance.
• We expect SDY to underperform against ongoing market headwinds towards its particular strategy.

The SPDR S&P Dividend ETF ( SDY ) offers targeted exposure to companies with a record of increasing their annual dividend payout. Despite an otherwise unassuming fund name, SDY's tilt towards high-yield stocks can be described as speculative, particularly in the current interest rate environment....

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