2 New Dividend ETFs to Consider
These days, there is no dearth of dividend ETFs for investors to choose from.
Some might even say the dividend ETF party is getting crowded. To be sure, it is a daunting task for any ETF to go up against well-entrenched behemoths such as the Vanguard Dividend Appreciation ETF (NYSE: VIG) and the SPDR S&P Dividend ETF (NYSE: SDY).
Those are fine funds, but worth noting is the fact that dividend ETFs are an evolving sub-segment of the ETF universe, giving investors some interesting new options in addition to the old guard.
While conventional wisdom, flawed as it may be, says investors should wait for new ETFs to gain traction, some new dividend funds are worthy of consideration by income investors right now. Consider this pair of newly minted ETFs.
Global X SuperDividend U.S. ETF (NYSE: DIV) Global X has been active on the new product front this year. Just this week, the issuer has SDIV). SDIV's combination of a trailing 12-month yield of almost eight percent, a monthly dividend and being less volatile than comparable international developed markets dividend ETFs has been recognized by investors.
Last August, SDIV crossed the $100 million in assets management level. That number was $465.2 million as of April 2, according to Global X data.
Regarding DIV, there are no guarantees it will follow the same trajectory as SDIV, but the former is off to a fine start. DIV has already accumulated $19.2 million in assets under management following its March 11 debut.
That success is not surprising because not only does DIV tap into the income theme, it is also a low volatility play. The new ETF tracks the INDXX SuperDividend U.S. Low Volatility Index and low volatility funds have been among the most prodigious gathers of assets this year. Like SDIV, DIV uses an equal-weight approach, meaning none of its 50 holdings account for more than 2.34 percent of the ETF's total weight.
Familiar names in DIV's top-10 lineup include Lockheed Martin (NYSE: LMT) and Merck (NYSE: MRK). DIV has an annual expense ratio of 0.45 percent and it is expected the ETF will pay a monthly dividend.
PowerShares S&P 500 High Dividend Portfolio (NYSE: SPHD) The PowerShares S&P 500 High Dividend Portfolio is certainly more seasoned than DIV having debuted in October, but that is still young enough to be considered a "new" ETF.
SPHD actually represents a case study in why waiting for some new ETFs to mature can prove foolhardy. The fund has gained 9.4 percent since its debut and just a 100-share investment would have already brought investors more than $50 in income. SPHD does pay a monthly dividend.
Like DIV, SPHD is an income/low volatility play. The PowerShares offering tracks the S&P 500 Low Volatility High Dividend Index, "which is composed of 50 securities traded on the S&P 500 Index that historically have provided high dividend yields and low volatility," according to the issuer.
Again, investors have embraced the dividend/low volatility combination. SPHD now has $103.5 million in assets under management, but about $69.4 million of that total has come in just this year, according to PowerShares flow data.
For more on new ETFs, click here.
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