X SPDR S&P Dividend (SDY) had been trading near all-time highs prior to a 2% drop Dec. 15 that sent it to its 50-day moving average. But shares found support at the line that day and have continued to do so since. A solid move off the support line could set up a fresh chance to buy the ETF. It advanced 6% from a mid-November rebound off the 50-day to its Dec. 4 intraday high.
The fund, which celebrated its 12th anniversary last month, has amassed $16.2 billion in assets. It tracks the S&P High Yield Dividend Aristocrats Index, which screens for companies that have raised their dividend for at least 2o consecutive years and weights them by yield. Because of the 20-year track record, stocks in the index feature both capital growth and dividend income traits.
Consumer staples made up the biggest sector weighting as of Dec. 22 at nearly 16% of assets. Industrials weighed in at 15%, followed by 14% in financials, 11% consumer discretionary and 10% utilities. Top holdings included AT&T, Tanger Factory Outlet Centers (SKT), Target (TGT), IBM and Chevron.
Because the fund is made up of high-yielding dividend payers, its annualized yield doesn’t disappoint at 2.3%, well above the S&P 500’s average payout of 1.8%. On an individual stock basis, AT&T’s annual payout is 5.1%, Tanger 5.4%, Target 3.8%, IBM 3.9% and Chevron 3.5%.
IBD’S TAKE: AT&T pays a dividend that’s nearly triple that of the S&P 500, but how are its fundamental ratings? For more analysis on AT&T, visit IBD Stock Checkup.
SDY has returned 13.9% year to date through Dec. 26, according to Morningstar Direct, lagging the S&P 500’s 22.2% gain. The gap narrows over the longer haul. The ETF’s average annual returns over the past three, five and 10 years are 10.3%, 15.1% and 9.7%, respectively, compared with the benchmark index’s 11.2%, 15.8% and 8.4% gains for the same periods.
SDY carries a 0.35% expense ratio.
Tuesday’s pick, First Trust Nasdaq 100 Technology (QTEC), closed below its 50-day line as Apple (AAPL) and its chip suppliers got hit by reports of weak demand for the iPhone X. But QTEC pared its loss as it continues to test its 50-day line.
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