DIV: I Love The Sector Allocation

seekingalpha06-24

Global X SuperDividend® U.S. ETF (DIV) seeks to replicate the performance of 50 large dividend-paying US stocks with lower volatility.DIV's sector composition includes high-yielding sectors like ...

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Telephone & Data Systems, Inc is a diversified telecommunications company providing wireless, wireline broadband, cable, and hosted and managed services. International Paper Company is a global manufacturer of renewable fiber-based packaging and paper products. National Health Investors, Inc. is a real estate investment trust  that owns senior housing facilities, hospitals and medical centers and leases to operators. As you can tell - wide range here. Sector Composition Here is where it gets particularly interesting.   globalxetfs.comDIV allocates toward high-yielding sectors that include energy, REITs, Utilities, and Consumer Staples, while holding some","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"REIT":"ALPS Active REIT ETF","CFA.SI":"NikkoAM-STC Asia REIT","SPHD":"标普500高股利投资组合ETF-PowerShares","BK4585":"ETF&股票定投概念","DIV":"Global SuperDividend US ETF","CFA":"VictoryShares US 500 Volatility Wtd ETF","BK4588":"碎股"},"translate_title":"DIV：我喜欢行业配置","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DIV":1,"REIT":1,"SPHD":1,"CFA.SI":0.9,"CFA":0.68},"content_text":"Global X SuperDividend® U.S. ETF (DIV) seeks to replicate the performance of 50 large dividend-paying US stocks with lower volatility.DIV's sector composition includes high-yielding sectors like energy, REITs, and Utilities, offering exposure to potential multi-year leadership cycles.While DIV has underperformed compared to peers, its current yield of 6.93% and monthly distribution schedule make it appealing for income-seeking investors.   BilanolI’ve gone on record multiple times arguing that the pendulum is due to swing back in favor of dividend stocks, away from the more momentum/capital appreciation parts of the marketplace which have dominated total return since the end of 2022. But in the pendulum swinging back towards dividend-paying stocks, there’s going to be a lot of nuance and different ways of playing that. One fund you may have come across and considered is the Global X SuperDividend® U.S. ETF (NYSEARCA:DIV). It hasn’t done well, but perhaps fortunes are about to change given the way the portfolio is constructed. DIV is an exchange-traded fund that seeks to replicate the performance of the Indxx SuperDividend® U.S. Low Volatility Index. This index captures the price and yield performance of 50 equally weighted US stocks that are large dividend payers with relatively lower volatility than the broader market. These stocks encompass US common stocks, master limited partnerships (MLPs) and real estate investment trusts (REITs). Launched in March 2013, DIV has a long history, with distributions occurring on a monthly basis. Its underlying index is a strict screen, which includes only companies with betas of between 0.85 and 1.0 versus their domestic benchmark, and dividend yields between 1 percent and 20 percent. It also requires that all companies have a current year dividend greater or equal to 50% of the previous year, and that the company has consistent payouts for the past two years. Decent criteria on the surface, but let’s take a look deeper. A Look At The Holdings No position makes up more than 2.72% of the fund currently, which makes sense given the equal weighting on rebalance of the 50 holdings.   globalxetfs.comSo what are some of these companies? Virtu Financial, Inc. is an electronic market maker and liquidity provider in the global equities, ETFs, and options markets. Telephone & Data Systems, Inc is a diversified telecommunications company providing wireless, wireline broadband, cable, and hosted and managed services. International Paper Company is a global manufacturer of renewable fiber-based packaging and paper products. National Health Investors, Inc. is a real estate investment trust (REIT) that owns senior housing facilities, hospitals and medical centers and leases to operators. As you can tell - wide range here. Sector Composition Here is where it gets particularly interesting.   globalxetfs.comDIV allocates toward high-yielding sectors that include energy, REITs, Utilities, and Consumer Staples, while holding some defensive industries such as Health Care and Communication Services. I actually absolutely love the top 3 sector weightings here, precisely because they’ve been such terrible performers over the past two years. I’ve written separately many times over arguing that Energy, REITs, and Utilities are due for a multi-year cycle of leadership, and this gets you access to all three. Peer Comparison A good comp here is the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD). This fund tracks an index of 50 high-dividend, low-volatility stocks within the S&P 500 Index. SPHD’s portfolio is biased towards Utilities, Consumer Staples and Financials, giving it a slightly different sector tilt than DIV. When we look at the price ratio of DIV to SPHD, we find that DIV has underperformed. I don’t mind this though, given my views on Energy and REITs on a go-forwarded basis.   stockcharts.comPros and Cons On the positive side, DIV provides exposure to a basket of US equities with high current yield, which can give investors a source of steady income that can cushion portfolio returns from market volatility. With a current yield of 6.93%, that’s appealing, alongside the low-volatility tilt that might offer some downside safety to investors who are scared of a dip in markets.   ycharts.com In addition, having a fund with a monthly distribution schedule can provide good monthly income for investors who need cash for recurring living expenses, or who want to systematically reinvest their distributions. And since DIV invests in a wide range of sectors and asset classes (common stocks, MLPs, REITs), investors can use it to diversify certain parts of their investment portfolios. But that’s not to say that DIV doesn’t have its drawbacks and risks as an investment. For one, the portfolio has potential to be overly volatile and sensitive to interest rates due to its concentrated bets in energy and REITs. The high dividend yields might also point to deeper issues with the underlying companies, potentially making the payouts feel less secure and stable. Furthermore, since DIV’s strategy involves buying low-volatility stocks, it means the fund could miss out on a lot of the upside during strong bull markets, as these companies can lag their higher-risk peers during periods of stronger economic growth. Conclusion  While the performance hasn’t been anything to write home about, on a go forward basis I think this might be an interesting fund. If large-cap tech dominance soon ends, and rates fall, I think the sector mix can actually be very appealing here for a catch-up trade, while getting dividends in the process. Worth considering.","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":1},"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/2445630420"}