For investors seeking momentum, SPDR S&P Dividend ETF (SDY - Free Report) is probably on radar now. The fund just hit a 52-week high and is up around 12.37% from its 52-week low price of $87.95/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
SDY in Focus
The SPDR S&P Dividend ETF before expenses seeks to closely match the returns and characteristics of the S&P High Yield Dividend Aristocrats Index. SDY provides exposure to 111 U.S. stocks. Consumer Staples is the top sector accounting for less than one-fourth of the portfolio while industrials, financials, utilities and consumer discretionary round off the next four spots. The fund charges 0.35% as expense ratio (see all Large-Cap ETFs here).
Why the Move?
Faster-than-expected rate hikes have affected stocks. Seasonal phenomenon has also got to the stocks as September is a historically weak month for equity markets and the mid-term elections that are to follow make matters worse. The return of volatility in the stock market has drawn investors again to a safer territory. Companies that payout dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis. Further, dividend-offering securities are the major sources of consistent income for investors when returns from the equity market are at risk.
More Gains Ahead?
Currently, SDY has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. The fund will most likely perform decently in near future as it has a positive weighted alpha of 10.12 and low 20-day historical volatility of 6.93%.
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