SDVD: 8.5% Yield, Good Fundamentals, And A Red Flag

2025-02-09 10:41:53 ET

Summary

• FT Vest SMID Rising Dividend Achievers Target Income ETF offers an 8.55% yield using a buy-write strategy in small and mid-caps.
• SDVD holds dividend growth stocks and sells short-term call options on the Russell 2000 Index.
• SDVD is well-diversified across holdings thanks to an equal-weight methodology, but is overweight in financials.
• The yield, fundamental metrics and performance since inception look good.
• However, there’s a red flag: most, if not all, buy-write ETFs older than 5 years show significant decay in value and inflation-adjusted distributions.

SDVD strategy

FT Vest SMID Rising Dividend Achievers Target Income ETF ( SDVD ) is an actively managed “Buy-Write” ETF launched on 8/9/2023. SDVD has 96 holdings, a dividend yield of 8.55%, a 30-day SEC yield of 1.37% and an expense ratio of 0.85%....

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