Four of the most popular dividend ETFs are S&P 500 Dividend Aristocrats (NYSEARCA:SDY), Dow Jones Dividend Select (NYSEARCA:DVY), FTSE High Dividend Yield (NYSEARCA:VYM) and Vanguard/Mergent Dividend Achievers (NYSEARCA:VIG).
If you hold all four, you have positions in 486 unique underlying stocks. In an equal weighted holding of the four ETFS, the top 50 account for just over 57% of total assets. The top 30 stocks account for about 43.5% of total assets, and the top 10 account for just under 22% of total assets.
For those who may be interested in owning the underlying stocks, instead of the ETFs, this table presents the 50 stock holdings along with several facts about each that may be of help.
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The table is ordered according to the weight of the stocks in the combined underlying assets from holding the four ETFs in equal dollar amounts.
Explanation of columns in the data table:
- Position in 52-week range: 0.00 means it is at the low, and 1.00 means it is at the top, while 0.50 means it is in the exact middle
- P/200 SMA: market price divided by 200-day simple moving average
- Yield: trailing yield
- Consensus 12-month target / market price: First Call "Street" consensus target price for next 12-months divided by current market price
- P/E estimate: P/E based on next year's estimate earnings
- PEG: P/E estimate divided by long-term projected earnings growth
- Is holding of ETF: indicates that the stock is in the holdings of the particular dividend ETF (SDY, DVY, VYM or VIG)
- GARP ETF GRPC: indicates that the stock is also a holding of the Russell Investment ETF ((NYSEARCA:GRPC)) based on the Growth At a Reasonable Price discipline
- Percentage allocation in equal weighted ETFs: the weight of the stock in the combined underlying holdings if you own the four ETFs in equal dollar amounts
- Cumulative percentage allocation: the cumulative % allocation of the stocks in the combined underlying holdings of the four dividend ETFs held in equal dollar amounts.
If one held the underlying stocks in equal weighted positions, once past the first ten listed, the average yield levels out at about 3.45% and the average 12-month target consensus target price levels out at about 12% above the current price.
There isn't much expense savings by owning the stocks instead of the ETFs (about 28 basis points), but a good deal more portfolio complexity. On the other hand, owning a significant number of the stocks, provides a better opportunity to do rebalancing, that may be beneficial, compared to rebalancing holdings of the ETFs, although we have not tested whether the performance difference between the two approaches would be significant.
The blended trailing yield from owning the four ETFs is about 2.90%, which means holding a significant number of the underlying stocks does create a meaningful yield advantage.
This list is a pretty good set of prospects for a dividend oriented investors to evaluate for a portfolio of individual stocks.
Disclosure: QVM has positions in a variety of the stocks identified in this article as of the creation date (December 23, 2011).
Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on the QVM site available here.