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Should iShares Select Dividend ETF (DVY) Be on Your Investing Radar?
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Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the iShares Select Dividend ETF (DVY - Free Report) is a passively managed exchange traded fund launched on 11/03/2003.
The fund is sponsored by Blackrock. It has amassed assets over $20.80 billion, making it one of the larger 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. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
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. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 2.99%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Utilities sector--about 26.90% of the portfolio. Financials and Energy round out the top three.
Looking at individual holdings, Oneok Inc (OKE - Free Report) accounts for about 2.81% of total assets, followed by Altria Group Inc (MO - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
The top 10 holdings account for about 18.94% 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 has added about 3.69% so far this year and is up about 29.08% in the last one year (as of 01/17/2022). In the past 52-week period, it has traded between $96.72 and $127.71.
The ETF has a beta of 0.95 and standard deviation of 25.20% for the trailing three-year period, making it a medium risk choice in the space. With about 106 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 $59.53 billion in assets, Vanguard Value ETF has $93.92 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?
Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the iShares Select Dividend ETF (DVY - Free Report) is a passively managed exchange traded fund launched on 11/03/2003.
The fund is sponsored by Blackrock. It has amassed assets over $20.80 billion, making it one of the larger 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. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
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. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 2.99%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Utilities sector--about 26.90% of the portfolio. Financials and Energy round out the top three.
Looking at individual holdings, Oneok Inc (OKE - Free Report) accounts for about 2.81% of total assets, followed by Altria Group Inc (MO - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
The top 10 holdings account for about 18.94% 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 has added about 3.69% so far this year and is up about 29.08% in the last one year (as of 01/17/2022). In the past 52-week period, it has traded between $96.72 and $127.71.
The ETF has a beta of 0.95 and standard deviation of 25.20% for the trailing three-year period, making it a medium risk choice in the space. With about 106 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 $59.53 billion in assets, Vanguard Value ETF has $93.92 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.