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 about 19.1% from its 52-week low price of $84.28/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
SDY provides exposure to those U.S. stocks that have consistently increased their dividends every year for at least 20 consecutive years. It has key holdings in industrials, financials, and consumer staples with double-digit exposure each. The fund charges 35 basis points in annual fees (see: all the Large Cap Value ETFs here).
Why the Move?
The dividend corner of the broad U.S. stock market has been an area to watch lately given the bouts of volatility that have raised the appeal for dividend investing. Dividend-paying securities are the major sources of consistent income for investors when returns from the equity market are at risk. This is because dividend products offer the best combination of safety in the form of payouts and stability as these are less immune to the large swings in stock prices. Additionally, the Fed’s shift to a patient approach on interest rates after lifting rates for three years has returned the lure for dividend investing this year.
More Gains Ahead?
Currently, SDY has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank. So, there is definitely some promise for those who want to ride this surging ETF a little further.
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