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Tom Lydon, ETF Trends (164 clicks)
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One of the larger dividend ETFs is a State Street fund that focuses on companies that have a consistent dividend track record. And like most dividend ETFs, it's yielding more than the 2% currently on offer from 10-year Treasury notes.

SPDR S&P Dividend ETF (SDY) tries to reflect the performance of the S&P High Yield Dividend Aristocrats Index, which includes the highest dividend yielding S&P Composite 1500 Index components that have consistently increased dividends every year over the last 20 consecutive years.

SDY has a 3% dividend yield and a 0.35% expense ratio.

Currently, the fund holds a 86 highest-yielding stocks of the S&P 1500 that raised dividends that have raised dividends over the last 20 years, and the largest holding is just 2.9% of the over portfolio.

The ETF's market-capitalization breakdown includes giant 19.4%, large 40.2%, medium 34.4% and small 6.0%.

Sector allocations include consumer staples 19.0%, industrials 16.2%, financials 16.0%, materials 10.0%, health care 9.6%, consumer discretionary 9.5%, utilities 9.0%, information technology 3.7%, energy 3.5% and telecom services 3.4%.

"The result is a curious mix of quality and distress," according to Morningstar Samuel Lee. "Quality because companies that have grown their dividends like clockwork tend to have solid earnings and sustainable business models; distress because the emphasis on the highest yielders means firms that have hit a rough patch right before the annual rebalance get big overweightings."

SPDR S&P Dividend ETF

(click to enlarge)

Max Chen contributed to this article.

Source: An ETF That Tracks Consistent Dividend Payers