ALPS Unveils Dogs of the Dow ETF
ALPS, the ETF issuer behind the popular ALPS Alerian MLP ETF (NYSE: AMLP), introduced the ALPS Sector Dividend Dogs ETF (NYSE: SDOG) today. The ALPS Sector Dividend Dogs ETF is a fund based on the Dogs of the Dow theory.
The Dogs of the Dow theory works like this: Investors purchase an equal-weight basket of the Dow's 10 highest yielders from the previous year at the start of the new year.
In 2011, the strategy delivered a 12.2% gain, but that number jumps to 17.2% when accounting for dividends and that beats the 4.6% increase for the Dow overall, according to Canaccord Genuity.
SDOG tracks the S-Network Sector Dividend Dogs Index (SDOGX) a portfolio of 50 stocks derived from the S&P 500, according to a statement issued by ALPS. All 50 stocks are weighted equally within the index.
SDOG, which charges an annual expense ratio of 0.4 percent and pay dividends quarterly, offers exposure to all 10 industry groups tracked by the S&P 500. Telecommunications receives a weight of 10.3 percent making it the largest sector represented within the new fund while utilities receive the smallest sector allocation at 9.9 percent.
The fund's top-10 holdings include Cablevision (NYSE: CVX), R.R. Donnelley (NASDAQ: RRD), Frontier Communications (NYSE: FTR), Reynolds American (NYSE: RAI), Lorillard (NYSE: LO), Johnson & Johnson (NYSE: JNJ), Merck (NYSE: MRK), Pitney Bowes (NYSE: PBI), CenturyLink (NYSE: CTL) and Federated Investors (NYSE: FII).
SDOG isolates the S&P 500 constituents with the highest dividend yield in their respective sectors providing the potential for price appreciation as market forces bring their yield into line with the overall market, according to ALPS.
The ALPS Alerian MLP ETF, the firm's largest fund, had over $3.3 billion in assets under management as of the close of markets on Jun 28.
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