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Is State Street SPDR S&P Dividend ETF (SDY) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the State Street SPDR S&P Dividend ETF (SDY - Free Report) is a smart beta exchange traded fund launched on 11/08/2005.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of 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
Because the fund has amassed over $20.71 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Value. SDY is managed by State Street Investment Management. Before fees and expenses, this particular fund seeks to match the performance of the S&P High Yield Dividend Aristocrats Index.
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.
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.
Annual operating expenses for this ETF are 0.35%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.53%.
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.
For SDY, it has heaviest allocation in the Industrials sector --about 18.4% of the portfolio --while Consumer Staples and Utilities round out the top three.
When you look at individual holdings, Verizon Communications Inc (VZ) accounts for about 3.26% of the fund's total assets, followed by Accenture Plc Cl A (ACN) and Realty Income Corp (O).
Its top 10 holdings account for approximately 20.51% of SDY's total assets under management.
Performance and Risk
Year-to-date, the State Street SPDR S&P Dividend ETF has gained about 9.08% so far, and is up roughly 9.89% over the last 12 months (as of 10/12/2026). SDY has traded between $135.96 $159.18 in this past 52-week period.
The fund has a beta of 0.69 and standard deviation of 11.93% for the trailing three-year period, which makes SDY a medium risk choice in this particular space. With about 158 holdings, it effectively diversifies company-specific risk .
Alternatives
State Street SPDR S&P 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.
Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Morningstar Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $110.11 billion in assets, Vanguard Morningstar Value ETF has $188.14 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.03%.
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 State Street SPDR S&P Dividend ETF (SDY) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the State Street SPDR S&P Dividend ETF (SDY - Free Report) is a smart beta exchange traded fund launched on 11/08/2005.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of 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
Because the fund has amassed over $20.71 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Value. SDY is managed by State Street Investment Management. Before fees and expenses, this particular fund seeks to match the performance of the S&P High Yield Dividend Aristocrats Index.
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.
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.
Annual operating expenses for this ETF are 0.35%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.53%.
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.
For SDY, it has heaviest allocation in the Industrials sector --about 18.4% of the portfolio --while Consumer Staples and Utilities round out the top three.
When you look at individual holdings, Verizon Communications Inc (VZ) accounts for about 3.26% of the fund's total assets, followed by Accenture Plc Cl A (ACN) and Realty Income Corp (O).
Its top 10 holdings account for approximately 20.51% of SDY's total assets under management.
Performance and Risk
Year-to-date, the State Street SPDR S&P Dividend ETF has gained about 9.08% so far, and is up roughly 9.89% over the last 12 months (as of 10/12/2026). SDY has traded between $135.96 $159.18 in this past 52-week period.
The fund has a beta of 0.69 and standard deviation of 11.93% for the trailing three-year period, which makes SDY a medium risk choice in this particular space. With about 158 holdings, it effectively diversifies company-specific risk .
Alternatives
State Street SPDR S&P 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.
Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Morningstar Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $110.11 billion in assets, Vanguard Morningstar Value ETF has $188.14 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.03%.
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.