Another New High-Dividend ETF Debuts

A spate of new high-dividend exchange-traded funds have been coming to market in recent weeks. The latest member of that group is the WBI Power Factor High Dividend ETF WBIY, courtesy of WBI Shares, one of the largest issuers of actively managed ETFs.

To be clear, the WBI Power Factor High Dividend ETF is a passively managed product, the first such ETF from New Jersey-based WBI. WBIY tracks the Solactive Power Factor Index.

WBIY: The Most Recent High-Dividend ETF

The new ETF's “underlying index screens for equity securities with an above-average forecasted dividend yield and further scores components based on three fundamental value characteristics, including price to trailing 12-month diluted earnings from continuing operations ratio, price to trailing 12-month free cash flow and price to trailing 12-month sales ratio. The 50 companies with the largest dividend indicated yield are chosen as underlying holdings and are weighted by dividend yield,” according to ETF Trends.

Strategy Of Execution

WBIY's power factor “approach aims to rank the top 50 highest-yielding dividend stocks by combining— Earning to Price (E/P), Cash Flow to Price (CF/P), and Sales to Price (S/P). These factors are applied to roughly 3,000 securities (large- to small-cap domestic securities) and then ranked. The ranking system applies thresholds based on the combination of the highest quality fundamentals and highest yield across the universe,” according to a statement issued by WBI.

Holdings

AT&T Inc. T, Valero Energy Corporation VLO, Kohl's Corporation KSS and General Motors Company GM combine for about 21 percent of the new ETF's lineup.

WBIY's quarterly rebalancing process could be an advantage for investors.

“WBIY’s quarterly rebalance schedule, which will tend to favor companies that have the highest ranked combination of yield and fundamentals. Rebalancing quarterly can help limit turnover and extreme exposure to particular sectors, component weights or other investment style factors, such as recently announced or implemented dividend cuts, thereby keeping the security list fresh,” according to the statement.