Dividends4Life: Dividend ETF Beats S&P 500 For A Decade

Dividend ETF Beats S&P 500 For A Decade

Posted by D4L | Saturday, October 05, 2013 | | 0 comments »

The First Trust Value Line Dividend Index Fund (NYSE: FVD) recently celebrated its tenth birthday. More important than FVD's age is that the ETF has delivered a 10-year annualized return of 9.2 percent compared with 7.4 percent for the S&P 500 (NYSE: SPY), according to Morningstar. While FVD does not grab the same amount of press as the largest dividend ETFs, investors have embraced the First Trust offering by pouring $725.2 million into the fund. FVD has also achieved a 5-Star Overall Morningstar Rating as of 8/30/13, among 1028 funds in the Large Value category based on the ETF's Morningstar Risk-Adjusted Return, according to a statement.

FVD has impressed over the past three years as well. Investors that owned the ETF and reinvested the dividends earned returns of 56.1 percent since September 15, 2010. Now that the Federal Reserve has confirmed it will not tapering its $85 billion-per-month bond-buying program, FVD could be poised for more upside. Over the past three months, the ETF gained 1.5 percent, including reinvested dividends, but rising interest rates weighed on the ETF a bit. FVD, which charges 0.7 percent year, is heavily allocated to the rate-sensitive utilities sector and consumer staples stocks. Those sectors are not only richly valued, but have also proven vulnerable to the recent spike in interest rates.

Source: International Business Times

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