Entering text into the input field will update the search result below

SDY: Certain Dividends In An Uncertain World

May 03, 2020 10:50 PM ETSPDR® S&P Dividend ETF (SDY)9 Comments


  • SDY tracks an index of Dividend Aristocrats, which I view quite favorably in our current environment.
  • The fund's top sector, Financials, is one of the cheapest in the market today. Further, it is a sector that often outperforms after market troughs.
  • The fund's 3% yield looks attractive in a low rate environment, especially given its track record on dividend growth.

Main Thesis

The purpose of this article is to articulate why I believe the SPDR S&P Dividend ETF (NYSEARCA:SDY) is an attractive investment option at its current market price. With many headwinds on the horizon, I am looking for conservative plays for new capital right now. SDY fits the bill, as the fund holds Dividend Aristocrats, which are companies with a long-term track record of increasing their dividends. While SDY has dropped markedly off its high, I view current levels attractively. The fund's yield has been growing and sits over 3%. The Financials sector, SDY's largest by weighting, is cheap in relative terms and has a history of performing well after market sell-offs. Further, SDY is quite light on Energy exposure, which I view positively given my outlook for the sector is negative in the short term. Finally, the fund's valuation is noticeably below that of the broader market, which could mean less downside risk compared to the major indices.


First, a little about SDY. The fund's objective is to "match the returns and characteristics of the S&P High Yield Dividend Aristocrats Index. This index screens for companies that have also followed a policy of consistently increasing dividends every year for at least 20 consecutive years". If a stock meets this criterion, it is included in the fund and SDY then weights the stock by yield. The fund currently sits at $85.49 and yields 3.16%. It has been a while since I reviewed SDY, and it was a fund I recommended about a year and a half ago. Since then, it has registered a positive return, but it has considerably lagged the broader market, as shown below:

(Source: Seeking Alpha)

Given all that has happened in the market since my last review, I wanted to take another look at the

This article was written by

Dividend Seeker profile picture
CEF/ETF income and arbitrage strategies, 8%+ portfolio yields

I've been in the Financial Services sector since 2008, which unsurprisingly gives me an invaluable insight in how markets can turn. I was a D1 athlete in college (men's tennis), where I studied Finance. I also have my MBA in Finance.

My readers/followers can trust that I won't pump any investment nor discuss a topic I don't genuinely follow and research. In that spirit, I list my portfolio here for transparency

Broad market: VOO; QQQ; DIA, RSP



Dividends: DGRO; SDY, SCHD

Municipals/Debt Funds: NEA, PML, PDO, BBN


Cash position: 30%

Analyst’s Disclosure: I am/we are long SDY. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.