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Buy Invesco High Yield Equity Dividend Achievers ETF For Safe Yield

Keith J. Dauzat profile picture
Keith J. Dauzat


  • This ETF is an index like investment of companies with a strong history of raising dividends.
  • COVID-19 has resulted in a temporary price decline that presents a short-term buying opportunity.
  • ETF is yield rich at 5.34%.
  • Retracement of coronavirus losses provides 21.5% upside.

Much has been written about the Dividend Achievers. These are stocks that have raised their distributions for at least 10 consecutive years. Doing so requires a firm to maintain a strong balance sheet, good cash flow, and usually rising sales. These firms tend to be recession resistant with strong moats. For retirees, a steady stream of dividends that is very nearly guaranteed to grow in excess of the inflation rate ensures spending power does not erode. At the same time, rising distributions tend to lift stock prices as well providing a capital growth kicker.

Right now, I really like Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY) as an investment. Like most indexed funds in the market, it has declined with the general coronavirus triggered selloff in equities. I think the market has over-reacted as these are strong companies that are sure to weather the storm. Thus, there is a limited time opportunity to buy in at a discount. PEY is currently more than 21.5% below its 52 week high, set just before the outbreak volatility event in March. Simple retracement to its pre-coronavirus position would yield a substantial gain for these stalwart companies.

But there is more. The ETF currently yields a fat 5.34% annually. I'll discuss later what portion of that yield may be at risk for cut. These companies have taken great strides to join the prestigious Dividend Achievers club. Firms are typically very hesitant to lose their status and will often borrow from the markets just to eke out a 1 penny raise just to keep the streak going. Your yield at market will almost certainly fall as the fund is currently undervalued. But your dollar distributions are almost certain to rise.

Index composition

PEY is based on the Nasdaq US Dividend Achievers 50 index. This index

This article was written by

Keith J. Dauzat profile picture
Retired from the corporate accounting grind on 5OCT2012 to trade on my own account full time. I invest in options, individual bonds, high yield securities, Closed End Funds, and "special situations".

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

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Comments (5)

I own PEY in my all ETF portfolio along with CDL and SPHD in the high yield category, I believe it is a good entrance point at this time. Between $13.00 and $15.00.
good investing
chippos profile picture
Any idea if there properitry method includes any sort of screen for dividend sustainabilty?
SleepyInSeattle profile picture
@chippos - the dividend seems sustainable as the fund is composed of dividend achievers and quite diversified; although some of its holdings may stop or reduce divs, overall the fund may do well - do not expect much capital appreciation, though.
SleepyInSeattle profile picture
PEY: Closing NAV (06/03/2020) $15.15 - I would not buy at a higher price than NAV - $16 would be a bit high -
SleepyInSeattle profile picture
Really good article. Thanks.
Long PEY.
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