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Should iShares Select Dividend ETF (DVY) Be on Your Investing Radar?
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Launched on 11/03/2003, the iShares Select Dividend ETF (DVY - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Blackrock. It has amassed assets over $18.03 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.38%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.80%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Utilities sector--about 26% of the portfolio. Financials and Materials round out the top three.
Looking at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 2.94% of total assets, followed by At&t Inc (T - Free Report) and Verizon Communications Inc (VZ - Free Report) .
The top 10 holdings account for about 18.21% of total assets under management.
Performance and Risk
DVY seeks to match the performance of the Dow Jones U.S. Select Dividend Index before fees and expenses. The Dow Jones U.S. Select Dividend Index measures the performance of a selected group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time.
The ETF return is roughly 1.12% so far this year and it's up approximately 2.92% in the last one year (as of 04/15/2024). In the past 52-week period, it has traded between $102.97 and $123.18.
The ETF has a beta of 0.89 and standard deviation of 15.90% for the trailing three-year period, making it a medium risk choice in the space. With about 107 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Select Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, DVY is a sufficient option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $53.85 billion in assets, Vanguard Value ETF has $111.46 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should iShares Select Dividend ETF (DVY) Be on Your Investing Radar?
Launched on 11/03/2003, the iShares Select Dividend ETF (DVY - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Blackrock. It has amassed assets over $18.03 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.38%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.80%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Utilities sector--about 26% of the portfolio. Financials and Materials round out the top three.
Looking at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 2.94% of total assets, followed by At&t Inc (T - Free Report) and Verizon Communications Inc (VZ - Free Report) .
The top 10 holdings account for about 18.21% of total assets under management.
Performance and Risk
DVY seeks to match the performance of the Dow Jones U.S. Select Dividend Index before fees and expenses. The Dow Jones U.S. Select Dividend Index measures the performance of a selected group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time.
The ETF return is roughly 1.12% so far this year and it's up approximately 2.92% in the last one year (as of 04/15/2024). In the past 52-week period, it has traded between $102.97 and $123.18.
The ETF has a beta of 0.89 and standard deviation of 15.90% for the trailing three-year period, making it a medium risk choice in the space. With about 107 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Select Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, DVY is a sufficient option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $53.85 billion in assets, Vanguard Value ETF has $111.46 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.