LLaunched on 10/21/2015, the SPDR Portfolio S&P 500 High Dividend ETF (SPYD) is a passively managed exchange-traded fund designed to provide broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by State Street Global Advisors. It has amassed assets of over $8.34 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US stock market.
Why Large Cap Value
Large-cap companies typically have a market capitalization above $10 billion. Overall, they are generally a stable option, with less risk and safer cash flow than mid- and small-cap companies.
Although value stocks have below-average price-to-earnings and price-to-book ratios, they also have below-average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in almost every market. But in strong bull markets, growth stocks are more likely to win.
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts over the long term if all other factors remain equal.
The annual operating expense of this ETF is 0.07%, making it one of the cheapest products on the market.
It has a 12-month dividend yield of 3.65%.
Sector exposure and main holdings
ETFs provide diversified exposure and thus minimize single-stock risk, but it’s still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has the largest allocation to the utilities sector, approximately 19.50% of the portfolio. Energy and finance complete the top three.
In terms of individual holdings, Valero Energy Corporation (VLO) accounts for approximately 1.86% of total assets, followed by Bristol-Myers Squibb Company (BMY) and Marathon Petroleum Corporation (MPC).
The top 10 holdings represent approximately 14.33% of total assets under management.
Performance and risks
SPYD seeks to match the performance of the S&P 500 High Dividend Index before fees and expenses. The S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend-paying stocks listed on the S&P 500 Index, based on dividend yield.
The ETF has added around 4.15% so far this year and is up around 10.14% over the past year (as of 8/16/2022). In the last 52-week period, it traded between $38.41 and $45.45.
The ETF has a beta of 0.97 and a standard deviation of 29.02% for the three-year period, making it a medium-risk pick in the space. With approximately 82 holdings, it effectively diversifies company-specific risks.
The SPDR Portfolio S&P 500 High Dividend ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio and momentum, among other factors. For this reason, SPYD is a great option for investors seeking exposure to the Style Box – Large Cap Value segment of the market. There are other additional ETFs in the space that investors might also consider.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) follow a similar index. While iShares Russell 1000 Value ETF has $55.49 billion in assets, Vanguard Value ETF has $102.86 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Retail and institutional investors are increasingly turning to passively managed ETFs because they offer low costs, transparency, flexibility and tax efficiency; these types of funds are also excellent vehicles for long-term investors.
To learn more about this product and other ETFs, research products that fit your investment goals, and read articles about the latest developments in the ETF investment universe, please visit Zacks ETF Center.
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SPDR Portfolio S&P 500 High Dividend ETF (SPYD): ETF Research Reports
Bristol Myers Squibb Company (BMY): Free Stock Analysis Report
Valero Energy Corporation (VLO): Free Stock Analysis Report
Marathon Petroleum Corporation (MPC): Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.