DHS: Dividend ETF Lagging Its Peers

seekingalpha08-04

John M Lund Photography Inc This article series aims at evaluating ETFs (exchange-traded funds) regarding past performance and portfolio metrics. Reviews with updated data are posted when necessary. ...

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Reviews with updated data are posted when necessary. ...</p>\n\n<a href=\"https://seekingalpha.com/article/4710286-dhs-dividend-etf-lagging-its-peers\">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":"SH","symbol_name":"标普500反向ETF","start_time":0,"source_url":"https://seekingalpha.com/article/4710286-dhs-dividend-etf-lagging-its-peers","article_id":"2456399667","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/56903023/image_56903023.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2456399667","pubTimestamp":1722771416,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"John M Lund Photography Inc This article series aims at evaluating ETFs (exchange-traded funds) regarding past performance and portfolio metrics. Reviews with updated data are posted when necessary. 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Reviews with updated data are posted when necessary. DHS strategy WisdomTree U.S. High Dividend Fund (NYSEARCA:DHS) started investing operations on 06/16/2006 and tracks the WisdomTree U.S. High Dividend Index. DHS has 376 holdings, a 30-day SEC yield of 3.77%, a dividend yield of 4.14%, and an expense ratio of 0.38%. DHS pays monthly distributions. As described by WisdomTree, The index is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share and adjusted for a company’s composite risk score. Composite risk score is an average of three factors: value, quality and momentum. The portfolio turnover rate in the most recent fiscal year was 47%. This article will use as a benchmark the S&P 500 index, represented by SPDR S&P 500 ETF Trust (SPY). Portfolio DHS invests exclusively in U.S. companies, with about 47% of asset value in large and mega caps, 30% in mid-caps and 22% in small and micro caps. The portfolio is quite heavy in financials (24.5%), followed by energy (17.2%), utilities (15.2%), consumer staples (14%) and healthcare (10.1%). Other sectors are below 6% individually and 19% in aggregate. Compared to the benchmark, DHS overweights the top 4 sectors, and to a lesser extent real estate. It massively underweights technology, consumer discretionary, communication and industrials.   Sector breakdown (chart: author; data: WisdomTree, SSGA) The portfolio is quite concentrated: the top 10 holdings, listed below with some basic ratios, represent 38.8% of assets. The 6 heaviest positions weigh over 4%. Risks related to other individual companies are low.   Ticker Name Weight EPS growth % P/E ttm P/E fwd Yield%   XOM Exxon Mobil Corp. 6.63% -44.87 14.34 13.35 3.25   ABBV AbbVie, Inc. 5.78% -38.48 63.19 17.47 3.28   MO Altria Group, Inc. 5.02% 52.24 8.81 10.00 7.68   CVX Chevron Corp. 4.60% -41.25 13.67 12.08 4.39   IBM International Business Machines Corp. 4.25% 320.72 20.84 18.74 3.53   PM Philip Morris International, Inc. 4.18% 9.24 20.86 18.45 4.41   MS Morgan Stanley 2.74% 6.93 15.80 13.69 3.86   C Citigroup, Inc. 2.12% -43.17 16.40 10.31 3.81   BMY Bristol Myers Squibb Co. 1.90% -186.76 N/A 67.92 4.92   UPS United Parcel Service, Inc. 1.62% -46.87 20.89 17.11 5.09   Click to enlarge Fundamentals DHS is cheaper than the benchmark regarding valuation ratios and it has lower growth rates, as reported in the table below. These are characteristics of traditional value funds, which is confirmed by DHS classification in the “Large Value” category by Fidelity and Morningstar.     DHS SPY   P/E TTM 15.51 26.53   Price/Book 1.83 4.63   Price/Sales 1.72 3.02   Price/Cash Flow 8.65 18.13   Earnings growth 20.10% 23.24%   Sales growth % 2.86% 8.80%   Cash flow growth % 2.71% 8.94%   Click to enlarge Data source: Fidelity In my ETF reviews, risky stocks are companies with at least 2 red flags: bad Piotroski score, negative ROA, unsustainable payout ratio, bad or dubious Altman Z-score, excluding financials and real estate where these metrics are unreliable. Based on these assumptions, risky stocks weigh 19.9% of asset value, which is a bad point (especially knowing that the heaviest sector, financials, is not taken into account by this number). Additionally, based on my calculation of aggregate quality metrics (reported in the next table), DJD portfolio quality is inferior to the benchmark.     DHS SPY   Altman Z-score 2.09 3.68   Piotroski F-score 5.21 6.08   ROA % TTM 5.64 7.32   Click to enlarge Past performance Since inception, DHS has underperformed SPY by 3.4% in annualized return.     Total Return Annual.Return Drawdown Sharpe ratio Volatility   DHS 210.36% 6.58% -67.25% 0.4 16.63%   SPY 444.50% 10.00% -55.19% 0.62 15.72%   Click to enlarge Data calculated with Portfolio123 However, the two funds are on par over the last 3 years:   DHS vs. SPY, 3-year total return (Seeking Alpha) The annual sum of distributions has increased from $1.76 per share in 2013 to $3.54 in 2023. This growth of 101% in 10 years has outpaced the cumulative inflation by a wide margin (about 32% in the same time, based on CPI).   Distribution history (Seeking Alpha) In previous articles, I have shown how three factors may help cut the risk in a dividend portfolio: Return on Assets, Piotroski F-score, and Altman Z-score. The next table compares DHS with a subset of the S&P 500: stocks with an above-average dividend yield, an above-average ROA, a good Altman Z-score, a good Piotroski F-score and a sustainable payout ratio. The subset is rebalanced annually to make it comparable with a passive index.     Total Return Annual.Return Drawdown Sharpe ratio Volatility   DHS 210.36% 6.58% -67.25% 0.4 16.63%   Dividend & quality subset 654.56% 12.03% -42.99% 0.74 15.43%   Click to enlarge Past performance is not a guarantee of future returns. Data Source: Portfolio123 DHS lags the dividend quality subset by 5.4% in annualized return. However, ETF performance is real and this simulated subset is hypothetical. My core portfolio holds 14 stocks selected in this subset (more info at the end of this post). Competitors The next chart compares characteristics of DHS and five of the most popular dividend ETFs:  Schwab US Dividend Equity ETF (SCHD) Vanguard High Dividend Yield Index ETF (VYM) SPDR S&P Dividend ETF (SDY) iShares Select Dividend ETF (DVY) iShares Core High Dividend ETF (HDV)      DHS SCHD VYM SDY DVY HDV   Inception 6/16/2006 10/20/2011 11/10/2006 11/8/2005 11/3/2003 3/29/2011   Expense Ratio 0.38% 0.06% 0.06% 0.35% 0.38% 0.08%   AUM $1.11B $58.07B $66.70B $20.68B $18.96B $10.76B   Avg Daily Volume $2.53M $230.91M $94.24M $34.13M $53.50M $34.78M   Holdings 376 103 556 136 104 81   Top 10 38.61% 40.42% 24.79% 18.42% 19.43% 57.73%   Turnover 47.00% 28.00% 6.00% 29.00% 17.00% 67.00%   Yield TTM 3.82% 3.50% 2.95% 2.48% 3.59% 3.34%   Div. Growth 5-Yr CAGR 6.31% 12.88% 5.81% 6.64% 6.35% 4.45%   Click to enlarge DHS has the highest fee (tie with DVY), and also the highest yield (by a short margin). The chart below plots their 10-year total returns. DHS is lagging its peers, almost tie with HDV.   DHS vs. Competitors, 10-year total return (Seeking Alpha) However, it is in the middle of the pack over the last 12 months:   DHS vs. Competitors, 12-month total return (Seeking Alpha) Takeaway WisdomTree U.S. High Dividend Fund holds over 300 dividend stocks, selected and weighted based on cash dividend and a risk score taking into account technical and fundamental factors. Financials weigh almost 25% of asset value. Valuation ratios are much cheaper than for the S&P 500, while growth and quality metrics are significantly inferior. Past performance is underwhelming: DHS has lagged the benchmark since inception and several popular dividend ETFs over the last 10 years. Among competitors, Schwab US Dividend Equity ETF looks better than DHS in fee, 10-year return, 5-year dividend growth and liquidity, making it a better choice for long-term investors and traders as well.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"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":"4.29.3","shortVersion":"4.29.3","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/2456399667"}