Top Holdings Of Dividend ETFs (Part 1: The Top 50 In May 2019)

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Includes: AAPL, CVX, IBM, JNJ, MSFT, PFE, PG, T, VZ, XOM
by: FerdiS
Summary

Compiling a virtual portfolio consisting of the top 50 holdings of Dividend ETFs is informative.

The May edition has two stocks from the Communication Services sector topping the list.

Dividend growth investors can compare their own portfolios to the top 50 and identify candidates for analysis and investment.

Part 2 of this article will showcase the top 7 stocks in each GICS sector.

From time to time, I compile a virtual portfolio of the top 50 holdings of Dividend ETFs. This is an informative exercise and certainly worth the effort.

Below is a brief summary of the methodology. For details, please refer to the June 2017 edition in this series. And if you want to learn about Dividend ETFs and ETF resources, the December 2016 article is worth revisiting.

Dividend ETF Analysis

Dividend ETFs invest in stocks that pay and regularly increase dividends. The issuers of ETFs provide data about the holdings of each ETF, including the percentage of assets under management allocated to each holding.

I collect these data from established Dividend ETFs and compile a spreadsheet with tickers of the top 25 holdings in each ETF, along with the relative weight of each holding.

To rank the top holdings, I use the relative weight of each holding and score tickers of the top 25 holdings proportionally, favoring larger investments over smaller ones within the same ETF.

Then I assign weights to each ETF based on the total assets under management. Rather than doing so proportionally, I use a log-based formula:

w = floor (log10 (assets in millions))

  • ETFs with assets under $100 million get a weight of 1.
  • ETFs with assets under $1,000 million (but ≥ $100 million) get a weight of 2.
  • ETFs with assets under $10,000 million (but ≥ $1,000 million) get a weight of 3.
  • ETFs with assets under $100,000 million (but ≥ $10,000 million) get a weight of 4.

With proportional scores assigned to each holding per ETF and weights assigned to each ETF, I simply calculate a weighted sum to get an aggregate score for each holding.

Sorting the aggregate scores in descending order determines the rank of each holding.

Note that I excluded stocks that don't pay dividends. Specifically, I excluded Amazon.com (AMZN), Facebook (FB), Berkshire Hathaway (NYSE:BRK.A) (BRK.B), and Alphabet (GOOG, GOOGL), even though these stocks made the top 50 list based on aggregate scores. As a dividend growth investor, I'm most interested in stocks that pay ever-increasing dividends.

Dividend ETF Database

I used ETFdb's screener to identify Dividend ETFs for this analysis, limiting the search to Dividend ETFs in North America that have positive 3-year returns.

The following table lists 52 ETFs, sorted by assets under management (in millions of dollars). The data source is ETFdb and the data presented in the table were extracted on 13 May 2019:

Top 50 Holdings

The following table presents the top 50 holdings ranked by aggregate score.

In the table, Rank is the stock's position when ranked by aggregate score and Freq indicates the number of dividend ETFs containing Ticker in their top 25 holdings. Years are the number of consecutive years of dividend increases. Yield is the forward dividend yield and 5-DGR is the compound annual dividend growth rate over the 5-year period ending in December 2018.

M*FV is Morningstar's fair value estimate, which is included to help readers with a superficial value assessment. Stocks trading below Morningstar's fair value estimate are highlighted in the Price column. Finally, Qual is a quality score based on the quality indicators presented in this article by David Van Knapp.

Stocks I own in my DivGro portfolio are highlighted in the Ticker column.

The top-ranked stock is Verizon Communications (VZ), which appeared in the top 25 holdings of 31 of the 52 Dividend ETFs. The runner-up is AT&T (T) with 27 appearances, followed by Exxon Mobil (XOM) and Microsoft (MSFT), with 25 and 23 appearances, respectively.

The following chart presents the top 50 holdings visually ranked by aggregate score. The tickers are color-coded by GICS sector.

Note that the Materials and Real Estate sectors have no stocks in the top 50 holdings. Here is a pie chart showing the distribution of stocks by GICS sector:

Here is an analysis of the top 50 holdings, courtesy of finbox.io:

As a virtual portfolio, the top 50 holdings have a dividend yield of 3.5% and would have returned about 11% over the past year. In comparison, the S&P 500 returned about 6% over the past year. Comparing the 5-year performances, we note that the top 50 holdings slightly underperformed the S&P 500.

Changes Since Last Time

It is informative to compare the changes in the top 10 since the last time I performed this analysis. You can review the entire list in this article:

Apart from positional shuffling, only one stock dropped out of the top 10 (Coca-Cola (NYSE:KO)) and was replaced by another (IBM (NYSE:IBM)). KO dropped six positions to rank #16, whereas IBM climbed ten positions from rank #19.

Rank

1

2

3

4

5

6

7

8

9

10

May'19

VZ

T

XOM

MSFT

AAPL

PG

CVX

JNJ

IBM

PFE

Nov'18

XOM

AAPL

MSFT

JNJ

VZ

PFE

CVX

T

PG

KO

Stocks that dropped out of the top 50 are BA, CVS, UNH, FE, UNP, KSS, AES, EXC, M, AEP, CTL, O, and DTE.

Stocks that moved into the top 50 are QCOM, AVGO, GIS, PFG, ED, KMB, KMI, WMB, GE, CAH, SJM, WU, and ACN.

How Does Your Portfolio Compare?

Dividend growth investors may find it interesting to compare their own portfolios to the top 50 holdings of Dividend ETFs. Are there any surprises? How many of the top 50 stocks do you own?

Comparing my portfolio of 80 different positions to the top 50 holdings, I own every stock in the top 10 and 19 stocks of the top 20 stocks. I own 30 of the top 50 holdings.

If "only" 30 of my stocks are in the top 50, then 50 stocks are not. Here is the list of stocks in DivGro that are ranked but fall outside of the top 50:

  • NextEra Energy (NEE) — ranked #62
  • Cummins (CMI) — ranked #63
  • Union Pacific (UNP) — ranked #65
  • International Paper (IP) — ranked #68
  • TJX (TJX) — ranked #69
  • Boeing (BA) — ranked #70
  • Archer-Daniels-Midland (ADM) — ranked #74
  • Aflac (AFL) — ranked #75
  • UnitedHealth (UNH) — ranked #78
  • CVS Health (CVS) — ranked #80
  • Air Products and Chemicals (APD) — ranked #82
  • Xcel Energy (XEL) — ranked #84
  • Valero Energy (VLO) — ranked #86
  • Starbucks (SBUX) — ranked #87
  • United Parcel Service (UPS) — ranked #90
  • Medtronic (MDT) — ranked #94
  • Lowe's (LOW) — ranked #95
  • National Retail Properties (NNN) — ranked #108
  • Eversource Energy (ES) — ranked #114
  • Quest Diagnostics (DGX) — ranked #123
  • Gilead Sciences (GILD) — ranked #129
  • Chubb (CB) — ranked #133
  • Amgen (AMGN) — ranked #136
  • Travelers (TRV) — ranked #143
  • Honeywell International (HON) — ranked #146
  • Ross Stores (ROST) — ranked #158
  • Public Storage (PSA) — ranked #167
  • Realty Income (O) — ranked #173
  • Illinois Tool Works (ITW) — ranked #181
  • Walgreens Boots Alliance (WBA) — ranked #188
  • Tanger Factory Outlet Centers (SKT) — ranked #192

In all, 61 of my DivGro stocks are ranked.

Key Ratings and Metrics

As a bonus, below is a table presenting key ratings and metrics from various sources:

Company

(Ticker)

VL

Safe.

Rank

VL

Fin.

Str.

M*

Econ.

Moat

S&P

Cred.

Rat.

SSD

Divi.

Safe.

SSD

P/o

Ratio

AIP

Earn.

Qual.

Dcom

DARS

Rat.

RS

DIV-

CON

1

Verizon

Communications

(VZ)

1

A++

Narrow

BBB+

84

51

5

3.6

4

2

AT&T

(T)

1

A++

Narrow

BBB

55

57

9

1.6

3

3

Exxon

Mobil

(XOM)

1

A++

Wide

AA+

86

74

13

3.6

4

4

Microsoft

(MSFT)

1

A++

Narrow

AAA

99

40

22

4.8

4

5

Apple

(NASDAQ:AAPL)

2

A++

Wide

AA+

99

25

22

4.2

5

6

Procter

&

Gamble

(NYSE:PG)

1

A++

Narrow

AA–

99

66

13

4.2

4

7

Chevron

(CVX)

1

A++

Wide

AA

85

60

17

3.8

4

8

Johnson

&

Johnson

(JNJ)

1

A++

Narrow

AAA

99

44

17

4.8

4

9

International

Business

Machines

(IBM)

1

A++

Wide

A

65

46

11

3.4

4

10

Pfizer

(PFE)

1

A++

Narrow

AA

79

45

16

4.6

4

11

Cisco

Systems

(CSCO)

1

A++

Wide

AA–

89

46

21

5.0

4

12

JPMorgan

Chase

(JPM)

2

A+

Wide

A–

68

32

NA

3.6

4

13

PepsiCo

(PEP)

1

A++

Wide

A+

94

66

6

4.2

4

14

Merck

(MRK)

1

A++

Wide

AA

99

44

11

4.6

4

15

Altria

(MO)

2

B++

Wide

BBB

65

79

4

3.6

4

16

Coca-Cola

(KO)

1

A++

Wide

A+

84

75

5

4.0

4

17

Philip

Morris

International

(PM)

2

B++

Wide

A

71

88

1

3.2

4

18

Home

Depot

(HD)

1

A++

Wide

A

89

45

5

4.8

5

19

Comcast

(CMCSA)

2

A

Narrow

A–

86

29

11

4.8

4

20

Qualcomm

(QCOM)

3

A+

Narrow

A–

48

69

10

2.4

3

21

AbbVie

(ABBV)

3

A

Wide

A–

61

50

6

3.6

5

22

Texas

Instruments

(TXN)

1

A++

Wide

A+

93

49

19

4.4

5

23

Intel

(INTC)

1

A++

Wide

A+

95

26

19

4.6

4

24

Wells

Fargo

(WFC)

2

A

None

A–

69

38

NA

2.8

4

25

Ford

Motor

(F)

3

B+

Narrow

BBB

41

47

7

2.8

1

26

Broadcom

(AVGO)

3

B++

Wide

BBB–

67

41

8

4.6

5

27

Dominion

Energy

(D)

2

B++

Wide

BBB+

75

86

2

3.8

3

28

General

Mills

(GIS)

1

A

Wide

BBB

69

62

5

4.0

4

29

Walt

Disney

(DIS)

1

A++

Wide

A

99

13

21

4.6

4

30

Walmart

(WMT)

1

A++

Wide

AA

76

42

17

4.0

4

31

McDonald's

(MCD)

1

A++

Wide

BBB+

78

55

2

4.8

4

32

Visa

(V)

1

A++

Narrow

AA–

99

19

NA

4.2

5

33

Southern

(SO)

2

A

Narrow

A–

65

83

3

3.8

3

34

ONEOK

(OKE)

NA

NA

Wide

BBB

54

74

0

3.4

4

35

3M

(MMM)

1

A++

None

AA–

86

57

8

4.6

4

36

Principal

Financial

(PFG)

3

A

Wide

A–

66

38

NA

3.2

3

37

Lockheed

Martin

(LMT)

1

A++

None

BBB+

81

43

5

4.6

4

38

Consolidated

Edison

(ED)

1

A+

Narrow

A–

92

66

3

4.2

3

39

Duke

Energy

(DUK)

2

A

Narrow

A–

80

79

3

4.0

3

40

Kimberly-Clark

(KMB)

1

A+

None

A

86

61

3

4.2

4

41

Kinder

Morgan

(KMI)

3

B

Narrow

BBB

65

40

NA

3.6

2

42

Williams

(WMB)

3

B+

Narrow

BBB

44

57

NA

2.8

1

43

General

Electric

(GE)

3

B

Wide

BBB+

23

41

12

3.0

1

44

Bank

of

America

(BAC)

3

B+

Narrow

A–

78

21

NA

3.4

4

45

Entergy

(ETR)

3

B++

Narrow

BBB+

74

52

3

3.2

2

46

PPL

(PPL)

2

B++

Narrow

A–

75

70

0

3.0

3

47

Cardinal

Health

(CAH)

3

A

None

BBB+

97

37

20

3.0

3

48

J.M.

Smucker

(SJM)

1

A

Wide

BBB

92

41

10

4.2

4

49

Western

Union

(WU)

NA

NA

Wide

BBB

48

41

NA

3.4

4

50

Accenture

(ACN)

1

A++

Wide

A+

92

41

24

4.6

NA

Concluding Remarks

Publicly-available data on the top holdings and assets under management allows one to rank these holdings and to create a list of dividend growth stocks worthy of consideration.

Please note that I'm not recommending any of the top 50 holdings. Many of these stocks are trading above fair value and may not be suitable for investment at this time. Before investing in any of these stocks, please do a thorough analysis to determine if the stocks are worthy of your investment dollars.

Because there are no Materials and Real Estate sector stocks in the top 50, it would be useful to consider the top-ranked stocks in those sectors regardless of the overall ranking. Investors looking to build a diversified portfolio might find such information useful. Therefore, I'll showcase the top 7 stocks in each GICS sector in Part 2 of this article.

I don't own any ETFs. Investing in ETFs provides several benefits, including instant diversification and passive investment. However, you have no control over the makeup of the ETF or its turnover rate. The investment manager determines the ETF's makeup and trading frequency and charges a recurring annual fee represented by the ETF's expense ratio.

For investors interested in ETF investing, below I'm repeating the table of 52 ETFs analyzed for this article. Each ticker links to the corresponding ETF website.

Thanks for reading and happy investing!

Ticker

Exchange-Traded Fund

Assets (Millions)

No. of Hold's

3-Year Returns

Annual Divi. Yield

Divi. Freq.

Exp.

Ratio

01

VTI

Vanguard Total Stock Market ETF

$113,425

1,578

48.78%

1.92%

Quarterly

0.03%

02

VIG

Vanguard Dividend Appreciation ETF

$33,863

183

46.02%

1.96%

Quarterly

0.08%

03

VYM

Vanguard High Dividend Yield ETF

$23,470

418

36.86%

3.12%

Quarterly

0.06%

04

SDY

SPDR S&P Dividend ETF

$18,470

112

32.74%

2.43%

Quarterly

0.35%

05

DVY

iShares Select Dividend ETF

$17,258

101

33.71%

3.32%

Quarterly

0.39%

06

SCHD

Schwab US Dividend Equity ETF

$9,292

101

43.05%

2.90%

Quarterly

0.06%

07

HDV

iShares Core High Dividend ETF

$7,087

76

31.12%

3.32%

Quarterly

0.08%

08

DGRO

iShares Core Dividend Growth ETF

$7,041

478

50.63%

2.26%

Quarterly

0.08%

09

FVD

First Trust Value Line Dividend Index

$5,947

197

36.65%

2.27%

Quarterly

0.70%

10

PRF

Invesco FTSE RAFI US 1000 ETF

$5,449

1,007

38.36%

2.05%

Quarterly

0.39%

11

FNDX

Schwab Fundamental U.S. Large Company Index ETF

$4,931

704

38.60%

2.21%

Quarterly

0.25%

12

NOBL

ProShares S&P 500 Aristocrats

$4,659

58

35.83%

2.11%

Quarterly

0.35%

13

DON

WisdomTree US MidCap Dividend ETF

$3,806

399

34.13%

2.16%

Monthly

0.38%

14

SPHD

Invesco S&P 500 High Dividend Low Volatility ETF

$3,228

51

28.01%

3.90%

Monthly

0.30%

15

DGRW

WisdomTree U.S. Dividend Growth Fund

$2,685

300

49.92%

2.19%

Monthly

0.28%

16

EMLP

First Trust North American Energy Infrastructure Fund

$2,418

50

23.37%

4.01%

Quarterly

0.95%

17

DES

WisdomTree US SmallCap Dividend ETF

$2,140

716

31.22%

2.83%

Monthly

0.38%

18

DLN

WisdomTree US LargeCap Dividend ETF

$2,041

298

40.79%

2.61%

Monthly

0.28%

19

SDOG

ALPS Sector Dividend Dogs ETF

$1,891

51

24.62%

3.56%

Quarterly

0.40%

20

RDIV

Oppenheimer Ultra Dividend Revenue ETF

$1,794

61

42.34%

3.63%

Quarterly

0.39%

21

QDF

FlexShares Quality Dividend Index Fund

$1,746

133

37.45%

3.82%

Quarterly

0.37%

22

FDL

First Trust Morningstar Dividend Leaders

$1,607

99

29.42%

3.58%

Quarterly

0.45%

23

SPYD

SPDR Portfolio S&P 500 High Dividend ETF

$1,573

81

33.51%

4.21%

Quarterly

0.07%

24

TILT

FlexShares Morningstar US Market Factor Tilt Index Fund

$1,461

1,985

44.27%

1.73%

Quarterly

0.25%

25

SPHQ

Invesco S&P 500 Quality ETF

$1,436

101

38.22%

1.54%

Quarterly

0.15%

26

TDIV

First Trust NASDAQ Technology Dividend Index Fund

$966

94

66.00%

2.42%

Quarterly

0.50%

27

DHS

WisdomTree US High Dividend Fund

$959

430

25.53%

3.27%

Monthly

0.38%

28

PEY

Invesco High Yield Equity Dividend Achievers ETF

$825

51

36.74%

3.79%

Monthly

0.54%

29

DTN

WisdomTree US Dividend ex-Financials Fund

$785

91

26.49%

2.83%

Monthly

0.38%

30

RDVY

First Trust NASDAQ Rising Dividend Achievers ETF

$759

51

59.39%

1.48%

Quarterly

0.50%

31

CDC

VictoryShares US EQ Income Enhanced Volatility Weighted ETF

$709

101

31.44%

3.25%

Monthly

0.35%

32

DTD

WisdomTree US Total Dividend ETF

$656

867

39.63%

2.58%

Monthly

0.28%

33

LVHD

Legg Mason Low Volatility High Dividend ETF

$644

79

27.77%

3.45%

Quarterly

0.27%

34

SMDV

ProShares Russell 2000 Dividend Growers ETF

$642

61

44.10%

1.89%

Quarterly

0.40%

35

REGL

ProShares S&P MidCap 400 Dividend Aristocrats ETF

$633

53

39.99%

1.76%

Quarterly

0.40%

36

OUSA

O'shares FTSE US Quality Dividend ETF

$465

138

36.45%

3.15%

Monthly

0.48%

37

DIV

Global X SuperDividend U.S. ETF

$453

51

13.06%

6.73%

Monthly

0.45%

38

QDEF

FlexShares Quality Dividend Defensive Index Fund

$381

149

41.57%

6.30%

Quarterly

0.37%

39

CDL

VictoryShares US Large Cap High Dividend Volatility Weighted ETF

$320

101

38.74%

3.04%

Monthly

0.35%

40

KBWD

Invesco KBW High Dividend Yield Financial ETF

$302

41

34.63%

8.02%

Monthly

2.42%

41

PFM

Invesco Dividend Achievers ETF

$295

261

36.97%

2.08%

Quarterly

0.55%

42

FNDB

Schwab Fundamental U.S. Broad Market Index ETF

$279

1,505

38.49%

2.24%

Quarterly

0.25%

43

DVP

Deep Value ETF

$267

21

49.60%

2.47%

Quarterly

0.59%

44

DGRS

WisdomTree U.S. SmallCap Dividend Growth Fund

$120

268

38.18%

2.44%

Monthly

0.38%

45

SYLD

Cambria Shareholder Yield ETF

$110

101

36.43%

2.46%

Quarterly

0.59%

46

WBIG

WBI Bull|Bear Yield 1000 ETF

$97

23

23.02%

1.76%

Monthly

1.04%

47

DEW

WisdomTree Global Equity Income Fund

$92

674

25.44%

3.99%

Quarterly

0.58%

48

DJD

Invesco Dow Jones Industrial Average Dividend ETF

$76

30

50.74%

3.20%

Quarterly

0.07%

49

CSB

VictoryShares US Small Cap High Dividend Volatility Weighted ETF

$69

101

42.93%

3.08%

Monthly

0.35%

50

QDYN

FlexShares Quality Dividend Dynamic Index Fund

$50

156

39.91%

2.58%

Quarterly

0.37%

51

LEAD

Reality Shares DIVCON Leaders Dividend ETF

$35

61

43.79%

1.33%

Quarterly

0.43%

52

PY

Principal Shareholder Yield Index ETF

$14

137

35.11%

2.23%

Quarterly

0.29%

Disclosure: I am/we are long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: My portfolio is public and available here: divgro.blogspot.com/...