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Is iShares Core High Dividend ETF (HDV) a Strong ETF Right Now?

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The iShares Core High Dividend ETF (HDV - Free Report) made its debut on 03/29/2011, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Blackrock, and has been able to amass over $7.47 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, HDV seeks to match the performance of the Morningstar Dividend Yield Focus Index.

The Morningstar Dividend Yield Focus Index measures the performance of a select group of U.S. equity securities issued by companies that have provided relatively high dividend yields on a consistent basis. Index constituents are drawn from the pool of stocks issued by U.S. domiciled companies that trade publicly on the NYSE, the NYSE Amex Equities, or The NASDAQ Stock Market.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for HDV are 0.08%, which makes it one of the least expensive products in the space.

The fund has a 12-month trailing dividend yield of 3.41%.

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.

Representing 21% of the portfolio, the fund has heaviest allocation to the Consumer Staples sector; Energy and Healthcare round out the top three.

Taking into account individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 9.27% of the fund's total assets, followed by Johnson & Johnson (JNJ - Free Report) and Verizon Communications Inc (VZ - Free Report) .

HDV's top 10 holdings account for about 55.27% of its total assets under management.

Performance and Risk

So far this year, HDV has gained about 16.74%, and it's up approximately 22.08% in the last one year (as of 11/10/2021). During this past 52-week period, the fund has traded between $84.18 and $99.70.

The ETF has a beta of 0.89 and standard deviation of 22.14% for the trailing three-year period, making it a medium risk choice in the space. With about 78 holdings, it effectively diversifies company-specific risk.


IShares Core High Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $57.84 billion in assets, Vanguard Value ETF has $88.61 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.

Bottom Line

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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