SPHD: High Yield, Low Volatility, Poor Returns

seekingalpha06-21

tadamichi There are reasons to believe bonds have bottomed for a long time and are on the cup of a large recovery. Assuming this is your view, it is a good time to buy dividend stocks, both to lock in...

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Assuming this is your view, it is a good time to buy dividend stocks, both to lock in...</p>\n\n<a href=\"https://seekingalpha.com/article/4700185-sphd-high-yield-low-volatility-poor-returns\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>SPHD: High Yield, Low Volatility, Poor Returns</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSPHD: High Yield, Low Volatility, Poor Returns\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-21 00:08 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4700185-sphd-high-yield-low-volatility-poor-returns><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>tadamichi There are reasons to believe bonds have bottomed for a long time and are on the cup of a large recovery. Assuming this is your view, it is a good time to buy dividend stocks, both to lock in...</p>\n\n<a href=\"https://seekingalpha.com/article/4700185-sphd-high-yield-low-volatility-poor-returns\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"DIV.AU","symbol_name":"UBS IQ Research Preferred AU Dividend","start_time":0,"source_url":"https://seekingalpha.com/article/4700185-sphd-high-yield-low-volatility-poor-returns","article_id":"2445053244","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1453953453/image_1453953453.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2445053244","pubTimestamp":1718899681,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"tadamichi There are reasons to believe bonds have bottomed for a long time and are on the cup of a large recovery. Assuming this is your view, it is a good time to buy dividend stocks, both to lock in an attractive dividend rate and to position for capital appreciation. I have therefore been scouring a number of dividend ETFs to buy. One ETF that caught my attention was the appealingly titled Invesco S&P 500 High Dividend Low Volatility ETF . High dividends and low volatility are the holy grail for income investors. Furthermore, the dividends are paid monthly. There is a lot to like, but as this article highlights, there may be better options. As Good as it Sounds?SPHD advertises a high yield and low volatility. 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Assuming this is your view, it is a good time to buy dividend stocks, both to lock in an attractive dividend rate and to position for capital appreciation. I have therefore been scouring a number of dividend ETFs to buy. One ETF that caught my attention was the appealingly titled Invesco S&P 500® High Dividend Low Volatility ETF (NYSEARCA:SPHD). High dividends and low volatility are the holy grail for income investors. Furthermore, the dividends are paid monthly. There is a lot to like, but as this article highlights, there may be better options. As Good as it Sounds? SPHD advertises a high yield and low volatility. Does it deliver? The Dividend SPHD has a 4.22% (TTM) yield, which is certainly at the high end. The scan below shows dividend ETFs with 50-day volatility below 15% to exclude the riskier funds. It also caps the expense ratio at 0.50% which excludes funds with more complex strategies like the FT Cboe Vest S&P 500® Dividend Aristocrats Target Income ETF (KNG) which uses a buy-write strategy to boost distributions. Dividend Comparisons (ETFdb.com) The list is topped by the Global X SuperDividend™ U.S. ETF (DIV) which achieves its high yield through a large exposure to energy and real estate stocks. This is a higher risk than I would like in an income fund, so I would exclude DIV from the list and compare SPHD to SPYD and FDL. These have slightly higher dividends, but have the disadvantage of quarterly payments instead of monthly. SPHD's dividend is 100% paid from income and not return of capital. However, the total return is disappointing compared to FDL and SPYD. Data by YCharts The performance in the short term is also disappointing. SPHD underperforms in most timeframes. Data by YCharts While we are on the subject of total return, a special mention should go to the Schwab U.S. Dividend Equity ETF™ (SCHD) which was excluded from the initial scan due to its rather low dividend of 3.44%. SCHD has outperformed all three funds significantly. Data by YCharts While SPHD has a trailing twelve-month dividend of 4.22%, this is likely to drop as distributions have fallen since a peak in September last year. Distributions (Seeking Alpha) An annualized rate of the last distribution yields just 3.68%. Volatility SPHD promises low volatility. With 50-day volatility at 11.61% and 200-day at 11.55%, we can say it delivers. FDL is very similar with readings of 11.83% and 11.16% respectively. There are funds with much lower volatility, but these also have lower yields. It is interesting that SPHD yields almost the same as the risk-free rate (UST 10Y yield) of 4.21%. If you really want low volatility, you could always buy bonds. Or consider the US Treasury 6 Month Bill ETF (XBIL) which currently offers a 5.27% yield and no volatility at all. The yield will drop when the Fed eventually cuts, but there is almost no risk to capital. More About SPHD SPHD is a passive fund based on the S&P 500 Low Volatility High Dividend Index. The 0.30% expense ratio is a bit high, especially when compared to SPYD with an expense ratio of just 0.07%. When investing in dividend ETFs, every percentage point counts. The S&P 500 Low Volatility High Dividend Index is constructed by the following methodology (from the Prospectus) - The Index Provider identifies the 75 securities in the S&P 500®Index with the highest dividend yields over the past 12 months, with no one Global Industry Classification Standard (GICS®) sector within the S&P 500®Index allowed to contribute more than 10 securities. Additional rules are selected for volatility. From those securities, the Index Provider selects for inclusion in the Underlying Index the 50 securities with the lowest realized volatility over approximately the past 12 months. Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations (increases or decreases in a stock's price) over time. The Underlying Index weights each constituent security by its trailing 12-month dividend yield, with higher dividend-yielding securities receiving proportionally greater weights. The selection process favors utilities and consumer defensive stocks. Sector Breakdown (Seeking Alpha) Energy and real estate are at a lower weighting than other funds, and this improves risk metrics. The top 10 holdings look like this - Top 10 Holdings (Seeking Alpha) I don't have a problem with this top 10, and I like the diversity, However, as the methodology doesn't scan for quality, stocks with poor dividend growth rates and financial metrics could be included. SPHD therefore delivers on dividends and low volatility, but lags in terms of total returns. As highlighted earlier, SCHD has a significantly better total return, and, as the fund page details, it \"invests in stocks selected for fundamental strength relative to their peers, based on financial ratios.\" Conclusions 2024 could be a good time to buy dividend ETFs as bonds are turning around. High dividends and low volatility are desirable, and SPHD delivers both. However, that doesn't make it the best fund in this space, and SPYD and FDL are more attractive due to their higher dividends and total returns.  If you are looking specifically for a monthly dividend ETF, SPHD is a decent choice, although there is little competition. The WisdomTree U.S. High Dividend Fund ETF (DHS) is the closest comparison and delivers similar returns.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2445053244"}