Dividend and value ETF comparison

Dividend ETFs or exchange traded funds are effective way to add diversification to a dividend portfolio. One could argue that they are all that your portfolio will ever need. Because dividend ETFs are holding stock to specific style(dividend stocks) they are also called “smart beta” ETFs.

What to look for

There are couple types of classifications for dividend ETFs.

  • High yield vs Dividend growth
  • US vs International(non-us)
  • Distributing dividend vs Automatically reinvesting

Usually high yield ETFs are low volatility ETFs that don’t have much upside potential. Therefore they are almost like debt investments. In the long run these are not the best. Dividend growth ETFs are opposite to this and have lower yield but higher growth in ETF value.

US focused ETFs are maybe the largest class of individual country ETFs and offer access to largest stock markets in the world. They are must have in any portfolio due to this in my opinion. However rest of the world is still there for taking and global / international ETFs can cover this.

Most ETFs distribute dividends out the fund like stocks. There is also possibility that ETF reinvests everything and holders dodge the capital tax way. This option is rarely used by ETFs.

Dividend ETF examples

OUSA O’Shares USA ETF by Mr Wonderful from Shark Tank

I watch shark tank and got curious when I heard about the ETFS O’Shares be Kevin O’Leary. Quote from official site: “The Fund is designed to be a core investment holding that seeks to provide cost efficient access to a portfolio of large-cap and mid-cap high quality, low volatility, dividend paying companies in the U.S. selected based on certain fundamental metrics. “

Gross expense ratio is 0.56%

Fund holds very traditional large dividend stocks

Name

Ticker

Sector

Fund Weight

Johnson & Johnson

JNJ

Health Care

5.39%

Exxon Mobil Corporation

XOM

Energy

4.88%

AT&T

T

Telecommunications

4.24%

Verizon Communications

VZ

Telecommunications

4.16%

Microsoft Corp

MSFT

Technology

3.90%

Procter & Gamble

PG

Consumer Goods

3.49%

Philip Morris International

PM

Consumer Goods

3.02%

Chevron

CVX

Energy

2.94%

Pfizer

PFE

Health Care

2.93%

Pepsico

PEP

Consumer Goods

2.36%

McDonalds Corp

MCD

Consumer Services

2.16%

Because fund is young there is no long performance record. Fund however managed to trump SP500 for the first year.

ousa Dividend and value ETF comparison

yahoo finance chart

RZV Guggenheim Small cap Value ETF

Value shares are usually considered also dividend shares. Also according to many publication value beats growth in long run and small beats large in long run. Therefore small cap value ETFs sound good.

Has gross expense ratio of 0.35%

Some holdings

Security Name

Ticker

Shares
Held

Market
Value

% of Net Assets

Sector / Industry

Century Aluminum Co

CENX

620,786

$4,208,929.08

2.46%

Materials

EZCORP INC

EZPW

339,918

$3,079,657.08

1.80%

Financials

SPX CORP

SPXC

168,257

$3,074,055.39

1.80%

Industrials

SKYWEST, INC.

SKYW

95,357

$2,728,163.77

1.60%

Industrials

ORION GROUP HOLDINGS INC

ORN

416,557

$2,682,627.08

1.57%

Industrials

SPARTANNASH CO

SPTN

80,540

$2,495,934.60

1.46%

Consumer Staples

SENECA FOODS-A

SENEA

72,771

$2,434,189.95

1.42%

Consumer Staples

Basically all stocks fall into category of “never-heard-of”

DON WisdomTree MidCap Dividend ETF

As the name says it is Mid cap dividend ETF

From official site:

  • Gain exposure to core U.S. mid cap equity from a broad range of dividend paying companies

  • Use to complement or replace midcap value or dividend oriented active and passive strategies

  • Use to satisfy demand for growth potential and income focus

Net expense ratio is 0.38%

Top holdings

Name

Weight

1. Oneok Inc

2.64%

2. Mattel Inc

1.49%

3. Centerpoint Energy Inc

1.28%

4. Frontier Communications Corp

1.16%

5. Coach Inc

1.08%

6. Macquarie Infrastructure Co LLC

0.97%

7. CMS Energy Corp

0.90%

8. Microchip Technology Inc

0.90%

9. Scana Corp

0.89%

10. AES Corp/The

0.82%

VIG Vanguard Dividend Appreciation ETF

Vanguard has long history in index funds and ETFs and they are well respected player in the industry.

From official site:

“Seeks to track the performance of the NASDAQ US Dividend Achievers Select Index (formerly known as the Dividend Achievers Select Index).

  • Provides a convenient way to track the performance of stocks of companies with a record of growing their dividends year over year.

  • Follows a passively managed, full-replication approach.“

Has expense ratio of 0.09% (that is right, that low 🙂 )

Largest holdings:

Rank

Holdings

1

Johnson & Johnson

2

Microsoft Corp.

3

PepsiCo Inc.

4

Coca-Cola Co.

5

Medtronic plc

6

3M Co.

7

McDonald’s Corp.

8

CVS Health Corp.

9

United Technologies Corp.

10

Walgreens Boots Alliance Inc.

Ten largest holdings = 30.9% of total net assets

Performance review and conclusion

Here is performance review of the ETFs(excluding OUSA). This is total return and not only ETF price change because dividends play large role with these ETFs.

Total return charts were generated by: http://www.etfreplay.com/charts.aspx

etf_curves Dividend and value ETF comparison

And bar comparison:

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etf_percentage Dividend and value ETF comparison

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volatility_etf Dividend and value ETF comparison

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Disclosure and conclusion:

I hold position in RZV and might add position to DON later due to good performance and low volatility

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