SPDR S&P Dividend ETF (SDY) offers a portfolio of companies with a long track record of increasing dividends. Companies that consistently increase dividends throughout market cycles tend to have sustainable competitive economic advantages or have experienced strong growth. However, weighting these stocks by yield gives the portfolio a tilt toward lower-quality mid-cap and value companies, which may have greater risk or slower growth in the future.
Since its 2005 inception, the fund has provided roughly the same return and standard deviation as a low-cost S&P 500 index fund on a pretax basis but lagged on a post-tax basis. Because of its tilt toward mid-cap and value stocks, the fund is only suitable for risk-tolerant investors or as a satellite holding as part of a diversified portfolio. In order to limit risk, this fund selects only companies that have increased their dividends for 20 consecutive years. Still, there is no guarantee that they will continue to increase dividends in the future.
Source: Morningstar
Related Articles:
- Are Defense Stocks Good Defensive Stocks?
- International Securities For A Diversified Income Portfolio
- 5 Dividend Stocks That Gave Me A 20%+ Annualized Return
- 6 Rainy Day Dividend Stocks
- When A Stock Fails To Raise Its Dividend: Is It Time To Sell Intel?
Weighting by Yield Can Increase Risk
Posted by D4L | Tuesday, June 02, 2015 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
If you're worried about inflation rearing its ugly head next year, you should probably worry about more likely catastrophes, such as bei...
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
When a company pays a dividend, it's a good thing for shareholders. When a company consistently pays a dividend every quarter, it's ...
-
If you've been holding back from investing in your future just because you don't have a lot of extra cash to spare, I've got gre...
-
If you are looking for high-yield dividend stocks that can beat the market, you might want to check out these three companies. They all have...
-
If you are here to build a portfolio that thrives in all seasons, consider dividend stocks. They can generate steady returns and provide sta...
-
My top financial goal is to eventually become financially independent. The foundation of my strategy is to make investments that produce an ...
-
One way to achieve financial freedom is to create passive income, or income that does not depend on your active involvement beyond a certain...
-
The company's remarkable consistency and low-risk business model make it a "first-choice investment opportunity," according to...
-
Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contribut...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.