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Is iShares Select Dividend ETF (DVY) a Strong ETF Right Now?
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The iShares Select Dividend ETF (DVY - Free Report) made its debut on 11/03/2003, 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?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Blackrock, DVY has amassed assets over $21.72 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. DVY, before fees and expenses, seeks to match the performance of the Dow Jones U.S. Select Dividend Index.
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.
Cost & Other Expenses
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.
Operating expenses on an annual basis are 0.38% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.01%.
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 in the Utilities sector - about 28.60% of the portfolio. Financials and Consumer Staples round out the top three.
Looking at individual holdings, International Business Machines Co (IBM - Free Report) accounts for about 2.17% of total assets, followed by Altria Group Inc (MO - Free Report) and Valero Energy Corp (VLO - Free Report) .
The top 10 holdings account for about 18.31% of total assets under management.
Performance and Risk
Year-to-date, the iShares Select Dividend ETF has lost about -0.82% so far, and is up about 6.40% over the last 12 months (as of 09/15/2022). DVY has traded between $113.21 and $132.14 in this past 52-week period.
DVY has a beta of 0.85 and standard deviation of 26.03% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 105 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Select Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $51.77 billion in assets, Vanguard Value ETF has $97.35 billion. IWD has an expense ratio of 0.18% 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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Is iShares Select Dividend ETF (DVY) a Strong ETF Right Now?
The iShares Select Dividend ETF (DVY - Free Report) made its debut on 11/03/2003, 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?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Blackrock, DVY has amassed assets over $21.72 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. DVY, before fees and expenses, seeks to match the performance of the Dow Jones U.S. Select Dividend Index.
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.
Cost & Other Expenses
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.
Operating expenses on an annual basis are 0.38% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.01%.
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 in the Utilities sector - about 28.60% of the portfolio. Financials and Consumer Staples round out the top three.
Looking at individual holdings, International Business Machines Co (IBM - Free Report) accounts for about 2.17% of total assets, followed by Altria Group Inc (MO - Free Report) and Valero Energy Corp (VLO - Free Report) .
The top 10 holdings account for about 18.31% of total assets under management.
Performance and Risk
Year-to-date, the iShares Select Dividend ETF has lost about -0.82% so far, and is up about 6.40% over the last 12 months (as of 09/15/2022). DVY has traded between $113.21 and $132.14 in this past 52-week period.
DVY has a beta of 0.85 and standard deviation of 26.03% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 105 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Select Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $51.77 billion in assets, Vanguard Value ETF has $97.35 billion. IWD has an expense ratio of 0.18% 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.