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TDV: Do Not Expect To See NOBL-Like Portfolio

Vasily Zyryanov profile picture
Vasily Zyryanov


  • With TDV, investors can gain exposure to a combination of tech-like expansion prospects and consistent dividend growth stories that encompass at least seven years.
  • But the issue is that TDV has a higher expense ratio, lower standardized yield, and exposure to riskier small-cap players.
  • The industry consolidation risk is also not to be forgotten.
  • Since its inception, TDV has performed much stronger if compared to both SPY and NOBL. This was achieved with only limited exposure to the FAANGM cohort.

Investing in dividend aristocrats is a time-proof strategy for building a consistent income stream. But the issue is that the ProShares S&P 500 Dividend Aristocrats ETF (NOBL) is underweight in tech stocks, which accounted for only 3.3% of the portfolio on April 1. What if an investor wants to steer clear of traditional cyclical sectors like industrials and materials that suffer most during recessions and build a dividend growth-oriented portfolio of IT stocks? There is a way to do so: the ProShares S&P Technology Dividend Aristocrats ETF (BATS:TDV), a fund that I would like to discuss today.

With TDV, investors can gain exposure to a combination of tech-like expansion prospects and consistent dividend growth stories that encompass at least seven years. The flip side is that TDV's standardized yield is almost half of NOBL's 2.25% and is even lower if compared to 1.46% of the iShares Core S&P 500 ETF (IVV). Hence, for yield hunters, TDV would be a suboptimal choice.

Another problem I see with the fund is that its underlying index's methodology is far less picky if compared to the S&P 500 Dividend Aristocrats index. Besides, with its expense ratio of 0.46%, TDV is more expensive than NOBL, which charges 0.35%.

The Underlying Index

TDV tracks the equally-weighted S&P Technology Dividend Aristocrats Index. To be eligible for inclusion, an IT stock must be a constituent of the S&P Total Market Index, the one that encompasses 3,624 equities at the moment, 482 of which are from the technology sector (as comes from the iShares Core S&P Total U.S. Stock Market ETF (ITOT) holdings).

And here comes the first essential difference between NOBL and TDV investors should pay attention to: the underlying index of NOBL can include only S&P 500 companies. This, in turn, implies that this fund invests only in large-cap players, while TDV's

This article was written by

Vasily Zyryanov profile picture
Vasily Zyryanov is an individual investor and writer.He uses various techniques to find both relatively underpriced equities with strong upside potential and relatively overappreciated companies that have inflated valuation for a reason.In his research, he pays much attention to the energy sector (oil & gas supermajors, mid-cap, and small-cap exploration & production companies, the oilfield services firms), while he also covers a plethora of other industries from mining and chemicals to luxury bellwethers.He firmly believes that apart from simple profit and sales analysis, a meticulous investor must assess Free Cash Flow and Return on Capital to gain deeper insights and avoid sophomoric conclusions.While he favors underappreciated and misunderstood equities, he also acknowledges that some growth stocks do deserve their premium valuation, and its an investor's primary goal to delve deeper and uncover if the market's current opinion is correct or not.

Analyst’s Disclosure: I am/we are long XOM. 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 (3)

rollwave2023 profile picture
So far has performed extremely well and not having the downside of small caps that we saw this past month
optionwriter profile picture
I would buy more TDV if it dips.
hawkrnc_19 profile picture
Thanks for bring this one to our attention. Your articles are very good.
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