iShares Select Dividend ETF Projected to Outperform Peers In Dividend Yield And Capital Appreciation Plays

DVY tracks the investment results of the Dow Jones U.S. Select Dividend Index, which measures the performance of the U.S leading stocks by dividend yield. The underlying index is composed of 100 of the highest dividend-yielding securities excluding REIT sector. For a stock to be included in the index, it must meet the following requirements:

• have a dividend per share greater than or equal to its five-year average dividend per share
• five-year average dividend coverage ratio of greater than or equal to 167%.
• have a three-month average daily trading volume of 200,000 shares
• have paid dividends in each of the previous five years
• non-negative trailing 12-month earnings per share
• float-adjusted market cap of at least $3 billion

DVY has many strong points while compared with its peers. It has outperformed other popular equity dividend exchange funds such as SCHD and VYM during the volatility of 2021 and 2022. DVY has a long track record of paying consistent dividends with a high single-digit growth rate. DVY is structured more defensively than its peers, as more than 1/4th of the fund is allocated in utilities and other classic defensive sectors, while there is also less of a focus on information technology.

Many top institutions while considering best dividend plays invest in a basket formed from the Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard High Dividend Yield ETF (VYM) to capture a combination of above-average dividend yield complemented by capital appreciation. DVY has outperformed SCHD and VYM on a YTD and 1-year basis for capital appreciation while producing a slightly larger-yielding dividend. While SCHD and VYM have outperformed DVY over the previous 5-years, DVY has proven it can better resist uncertainty, fiscal and economic stress (the rising Fed rates!) and volatility.