The Dividend ETF Quietly Outperforming the S&P 500
Yahoo Finance ·
The iShares Core High Dividend ETF ( HDV 1.21% ) isn't as large or as popular as other dividend ETFs. As a result, many investors have likely missed that the fund is outperforming the S&P 500 this year. While that broad market index was up a strong 9% through the first half of the year, HDV is up more than 15%. Here's a closer look at this top ETF and what has driven its quiet outperformance so far this year. The iShares Core High Dividend ETF is a passively managed fund that tracks an index of high-yielding U.S. dividend stocks ( Morningstar Dividend Yield Focus Index) . That index doesn't just screen companies based on their dividend yield. It also applies additional financial quality screens, including having a wide economic moat (sustainable competitive advantage) and a high distance to default (strong financial health). The index selects the highest-yielding stocks from those that pass its quality screens. It weights stocks in proportion to the dividends they pay. The net result is an ETF that currently holds 75 stocks. The iShares Core High Dividend ETF has a 2.9% dividend yield based on its current price and dividend payments over the last 12 months. That's nearly three times higher than the S&P 500's current dividend yield of 1.1%.
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