The SPDR Dividend ETF (SDY.A: Quote, Profile, Research) tracks the Standard & Poor's High Yield Dividend Aristocrats Index, which includes 50 high- yielding companies in the S&P Composite of 1,500 stocks that meet certain criteria and have increased their dividends every year for at least 25 years.
Howard Silverblatt, market equity analyst for S&P, said at a briefing at the Amex that dividends have been regaining favor with investors since late in 2002, after a long period in which they were out of fashion.
"Basically, companies were penalized for returning cash to their owners," he said. But the bear market of 2000-2002 brought a change in the way companies and investors viewed dividends, he said.
The components must have a minimum market capitalization of $500 million and must trade an average of 1.5 million shares or more per year.
Concentration limits prevent any stock from being more than 4 percent of the index weight at the time of a quarterly re-balancing. Those issues with the highest yield get the biggest weight in the index.
Most recently, the yield on the portfolio was about 3.4 percent.
"There are other dividend products out there that are very heavily weighted toward utilities and financial," said Jim Ross, co-head of the SSgA Advisor Strategies Group.
The SPDR Dividend ETF is currently about 26 percent in financial stocks, and utilities and financials together make up less than 50 percent.
Stock Market News and Investment Information | Reuters.com
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