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Many investors don't have the desire or time to research individual stocks. However, these investors still want exposure to the stock market and have a desire to collect dividends. By investing in the SPDR S&P Dividend Fund (NYSEARCA:SDY), investors can automatically have a diverse mix of the dividend aristocrats. These are companies who have increased dividend payments for 25 consecutive years. These are typically large, stable blue-chip companies.

SDY currently yields 3.17% and has an expense ratio of 0.36%. Some young investors should consider reinvesting the dividends from SDY to build wealth over time. Other investors may prefer to use the dividends as a source of income.

Here's a look at the top 5 holdings in the fund and their key statistics:

Avon (NYSE:AVP)

Pitney Bowes (NYSE:PBI)

AT&T (NYSE:T)

HCP (NYSE:HCP)

Leggett and Platt (NYSE:LEG)

Dividend

6%

11.2%

4.8%

4.4%

4.9%

Forward

PE Ratio

15.3

6.89

14.26

15.65%

14.65%

PEG Ratio

-3.74

1.57

1.55

1.81

1.12

Operating

Cash Flow

(NYSE:TTM)

$595.7M

$840.96M

$35.35B

$774.9M

$374.2M

Current

Ratio

1.45

0.98

0.65

13.03

1.6

Projected 5-Year Annual Earnings Growth

-5.03%

4.2%

9.85%

9.15%

15%

Although I only listed the top five holdings, SDY contains a total of 82 companies. The complete list of companies can be found here.

Investors considering an investment in SDY should consider the average five-year projected annual earnings growth of the S&P 500 of 10% to forecast the future price appreciation of the fund. For example, the underlying price of SDY should gain about 10% per year on average over the next five years. Those who are interested in reinvesting the 3.17% dividend should expect an overall annual return of 13.17% (dividends + price appreciation). Therefore, an initial investment of $10,000 should grow to be worth over $18,000 in five years when dividends are reinvested. Those who choose to spend their dividends instead of reinvesting them can expect an initial $10,000 investment to grow to $16,000 in five years.

The results are more dramatic over longer periods of time. Over ten years an initial $10,000 investment should be worth about $26,000 by the year 2022 if dividends are spent and not reinvested. However, when dividends are reinvested, the $10,000 should grow to be worth over $34,000 by the year 2022.

It should be noted that these results can be achieved without much effort on the part of the investor. For those who don't have the desire to do their own research to own individual stocks in a do-it-yourself portfolio, owning SDY can be a viable and profitable alternative.

Source: Automatically Diversify And Collect Dividends With One Ticker