Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the State Street SPDR S&P Dividend ETF (SDY Quick QuoteSDY - Free Report) is a passively managed exchange traded fund launched on November 8, 2005.

The fund is sponsored by State Street Investment Management. It has amassed assets over $20.88 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 fall in the large cap category tend to 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 are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.5%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector -- about 18.9% of the portfolio. Consumer Staples and Utilities round out the top three.

Looking at individual holdings, Verizon Communications Inc (VZ) accounts for about 3.6% of total assets, followed by Realty Income Corp (O) and Target Corp (TGT).

The top 10 holdings account for about 20.07% of total assets under management.

Performance and Risk

SDY seeks to match the performance of the S&P High Yield Dividend Aristocrats Index before fees and expenses. The S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years.

The ETF return is roughly 6.59% so far this year and is up about 16.36% in the last one year (as of 04/15/2026). In the past 52-week period, it has traded between $127.39 and $155.93.

The ETF has a beta of 0.74 and standard deviation of 12.16% for the trailing three-year period, making it a medium risk choice in the space. With about 158 holdings, it effectively diversifies company-specific risk.

Alternatives

State Street SPDR S&P 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, SDY 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 Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value Index Fund ETF Shares (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $86.14 billion in assets, Vanguard Value Index Fund ETF Shares has $169.42 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.03%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

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.