FerdiS
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Summary
- This article presents the top 50 holdings of 50 dividend-paying ETFs.
- Two stocks from the Information Technology sector top the list, replacing two from the Communications Services sector from May's edition.
- Dividend growth investors can compare their own portfolios to the top 50 and identify candidates for analysis and investment.
- Part 2 of this article will showcase the top 7 stocks in each GICS sector.
From time to time, I compile a list of the top 50 holdings of dividend ETFs. I find the exercise insightful and worthwhile. Comparing my portfolio to the top holdings of dividend ETFs is informative, as it helps me to identify candidate stocks for analysis and possible investment.
Below, I'll provide a brief summary of the methodology. For more details, please refer to previous editions in this series. The June 2017 edition explains the methodology in detail, while the December 2016 is worth revisiting if you want to learn about dividend ETFs and ETF resources.
In the May 2019 edition, I noted there were no Real Estate sector stocks in the top 50 holdings. The reason is that the dividend ETFs I analyzed focus on equity investment. For this article, I decided to add five dividend-paying ETFs that invest in real estate equities.
Methodology
The issuers of ETFs provide data about the holdings of each ETF, including the percentage of assets under management allocated to each holding. I collect these data from established dividend-paying ETFs and compile a spreadsheet with tickers of the top 25 holdings in each ETF, along with the relative weight of each holding.
To rank the top holdings, I use the relative weight of each holding and score tickers of the top 25 holdings proportionally, favoring larger investments over smaller ones within the same ETF. Then I assign weights to each ETF based on the total assets under management. Rather than doing so proportionally, I use a log-based formula:
w = floor (log10 (assets in millions))
- ETFs with assets between $100 million and $1,000 million get a weight of 2.
- ETFs with assets under $10,000 million (but ≥ $1,000 million) get a weight of 3.
- ETFs with assets under $100,000 million (but ≥ $10,000 million) get a weight of 4.
- ETFs with assets under $1,000,000 million (but ≥ $100,000 million) get a weight of 5.
With proportional scores assigned to each holding per ETF and weights assigned to each ETF, I simply calculate a weighted sum to get an aggregate score for each holding.
Sorting the aggregate scores in descending order determines the rank of each holding.
Note that I exclude stocks that don't pay dividends, such as Berkshire Hathaway (BRK.A) (BRK.B) that would have been ranked #40 otherwise. As a dividend growth investor, I'm mostly interested in stocks that pay ever-increasing dividends.
Dividend ETF Database
I used ETFdb's screener to identify dividend ETFs for this analysis, limiting the search to dividend and real estate ETFs in North America that have positive 3-year returns. Additionally, I excluded ETFs with assets under management below $100 million and limited the number of real estate ETFs to the top five based on assets under management.
The following table lists the 50 ETFs I analyzed, sorted by assets under management (in millions of dollars). The data source is ETFdb and the data presented in the table were extracted on 28 November 2019:
Below, the 50 ETFs are presented in tabular form so readers can more easily reference the data.
Ticker Exchange-Traded Fund Asset Class Assets (Millions) No. of Holdings 3-Year Returns Annual Dividend Yield Dividend Frequency Expense Ratio 01 Vanguard Total Stock Market ETF Equity $133,868 1,587 48.56% 1.71% Quarterly 0.03% 02 Vanguard Dividend Appreciation ETF Equity $41,017 182 53.16% 1.72% Quarterly 0.06% 03 Vanguard Real Estate Index Fund Real Estate $37,474 182 33.13% 3.37% Quarterly 0.12% 04 Vanguard High Dividend Yield ETF Equity $28,559 404 35.76% 3.05% Quarterly 0.06% 05 SPDR S&P Dividend ETF Equity $19,783 113 34.52% 2.36% Quarterly 0.35% 06 iShares Select Dividend ETF Equity $18,375 101 31.29% 3.34% Quarterly 0.39% 07 Schwab US Dividend Equity ETF Equity $11,256 100 45.02% 2.91% Quarterly 0.06% 08 iShares Core Dividend Growth ETF Equity $9,815 479 54.89% 2.17% Quarterly 0.08% 09 First Trust Value Line Dividend Index Equity $9,113 189 38.41% 2.15% Quarterly 0.70% 10 iShares Core High Dividend ETF Equity $7,633 75 32.19% 3.27% Quarterly 0.08% 11 ProShares S&P 500 Aristocrats Equity $6,254 58 47.52% 1.89% Quarterly 0.35% 12 Schwab US REIT ETF Real Estate $6,132 95 30.30% 2.70% Quarterly 0.07% 13 Schwab Fundamental U.S. Large Company Index ETF Equity $5,991 697 38.72% 2.08% Quarterly 0.25% 14 Invesco FTSE RAFI US 1000 ETF Equity $5,560 997 34.55% 1.95% Quarterly 0.39% 15 iShares U.S. Real Estate ETF Real Estate $4,585 115 38.81% 2.60% Quarterly 0.42% 16 WisdomTree US MidCap Dividend ETF Equity $4,110 395 28.86% 2.29% Monthly 0.38% 17 Real Estate Select Sector SPDR Fund Real Estate $3,932 33 43.76% 2.95% Quarterly 0.13% 18 Invesco S&P 500® High Dividend Low Volatility ETF Equity $3,666 51 26.09% 4.14% Monthly 0.30% 19 WisdomTree U.S. Dividend Growth Fund Equity $3,204 292 55.42% 2.31% Monthly 0.28% 20 SPDR Dow Jones REIT ETF Real Estate $2,722 95 29.72% 3.22% Quarterly 0.25% 21 First Trust North American Energy Infrastructure Fund Equity $2,592 47 12.89% 3.98% Quarterly 0.95% 22 WisdomTree US LargeCap Dividend ETF Equity $2,359 295 43.49% 2.64% Monthly 0.28% 23 WisdomTree US SmallCap Dividend ETF Equity $2,176 684 14.68% 2.58% Monthly 0.38% 24 SPDR Portfolio S&P 500 High Dividend ETF Equity $2,038 81 26.68% 4.36% Quarterly 0.07% 25 First Trust Morningstar Dividend Leaders Equity $1,804 101 31.71% 3.78% Quarterly 0.45% 26 ALPS Sector Dividend Dogs ETF Equity $1,754 51 20.59% 3.35% Quarterly 0.40% 27 FlexShares Quality Dividend Index Fund Equity $1,745 124 34.18% 3.63% Quarterly 0.37% 28 Invesco S&P 500® Quality ETF Equity $1,711 99 44.98% 1.48% Quarterly 0.15% 29 Invesco S&P Ultra Dividend Revenue ETF Equity $1,637 61 28.74% 3.52% Quarterly 0.39% 30 FlexShares Morningstar US Market Factor Tilt Index Fund Equity $1,502 2,214 37.71% 1.52% Quarterly 0.25% 31 First Trust NASDAQ Technology Dividend Index Fund Equity $1,092 93 53.92% 2.30% Quarterly 0.50% 32 First Trust NASDAQ Rising Dividend Achievers ETF Equity $1,031 50 48.11% 1.53% Quarterly 0.50% 33 WisdomTree US High Dividend Fund Equity $951 374 27.66% 3.49% Monthly 0.38% 34 Invesco High Yield Equity Dividend Achievers™ ETF Equity $910 51 25.15% 3.91% Monthly 0.53% 35 WisdomTree US Dividend ex-Financials Fund Equity $817 91 24.24% 2.82% Monthly 0.38% 36 WisdomTree US Total Dividend ETF Equity $802 873 40.88% 2.58% Monthly 0.28% 37 ProShares Russell 2000 Dividend Growers ETF Equity $778 64 24.99% 2.01% Quarterly 0.40% 38 ProShares S&P MidCap 400 Dividend Aristocrats ETF Equity $768 52 28.86% 1.85% Quarterly 0.40% 39 VictoryShares US EQ Income Enhanced Volatility Weighted ETF Equity $674 101 29.05% 2.99% Monthly 0.35% 40 Global X SuperDividend U.S. ETF Equity $566 48 17.68% 7.57% Monthly 0.45% 41 O'shares FTSE US Quality Dividend ETF Equity $562 140 43.94% 2.36% Monthly 0.48% 42 FlexShares Quality Dividend Defensive Index Fund Equity $470 158 39.53% 5.89% Quarterly 0.37% 43 VictoryShares US Large Cap High Dividend Volatility Weighted ETF Equity $358 101 36.83% 2.93% Monthly 0.35% 44 Invesco Dividend Achievers™ ETF Equity $317 258 41.52% 1.89% Quarterly 0.54% 45 Deep Value ETF Equity $316 21 36.63% 2.59% Quarterly 0.59% 46 Schwab Fundamental U.S. Broad Market Index ETF Equity $299 1,530 37.46% 2.07% Quarterly 0.25% 47 Invesco KBW High Dividend Yield Financial ETF Equity $294 40 19.36% 8.69% Monthly 2.42% 48 WisdomTree U.S. SmallCap Dividend Growth Fund Equity $130 260 20.02% 2.49% Monthly 0.38% 49 Cambria Shareholder Yield ETF Equity $109 101 29.52% 1.99% Quarterly 0.59% 50 VictoryShares US Small Cap High Dividend Volatility Weighted ETF Equity $100 101 27.94% 3.10% Monthly 0.35%
Top 50 Holdings
The following table presents the top 50 holdings ranked by aggregate score.
In the table, Rank is the stock's position when ranked by aggregate score and Freq indicates the number of ETFs containing Ticker in their top 25 holdings. Years are the number of consecutive years of dividend increases. Yield is the forward dividend yield and 5-DGR is the compound annual dividend growth rate over the 5-year period.
I also provide a fair value estimate ((FV)) to help identify stocks that trade at favorable valuations. Stocks trading below fair value are shaded green in the Price column. To estimate fair value, I reference fair value estimates from several sources, ignore the outliers (the lowest and highest values) and use the average of the median and mean of the remaining values as my fair value estimate.
Finally, Qual is a quality score based on the quality indicators presented in this article by David Van Knapp.
Stocks I own in my DivGro portfolio are highlighted in the Ticker column.
The top-ranked stock is Apple (AAPL), which appeared in the top 25 holdings of 26 of the 50 ETFs. The runner-up is Microsoft (MSFT) with 25 appearances, followed by AT&T (T) and Verizon Communications (VZ), each with 19 appearances.
The following chart presents the top 50 holdings visually ranked by aggregate score. The tickers are color-coded by GICS sector.
Here is a pie chart showing the distribution of stocks by GICS sector:
Here is an analysis of the top 50 holdings, courtesy of finbox.io:
As a virtual portfolio, the top 50 holdings have a dividend yield of 3.3% and would have returned about 19% over the past year and about 46% over the past 5 years.
Changes Since Last Time
It is informative to compare the changes in the top 10 since the last time I performed this analysis. You can review the entire list in this article:
- Top Holdings Of Dividend ETFs (Part 1: The Top 50 In May 2019)
Apart from positional shuffling, two stocks dropped out of the top 10, International Business Machines (IBM) and Pfizer (PFE). They were replaced by two stocks from the Financials sector, Wells Fargo (WFC) and JPMorgan Chase (JPM).
Stocks that moved into the top 50 are PLD, SPG, AMT, WELL, AVB, PSA, LYB, EQR, UNH, CCI, AMGN, BMY, LEG, TGT, CTL, and PEAK.
Stocks that dropped out of the top 50 are WMB, SJM, PFG, OKE, MCD, LMT, KMI, KMB, GIS, GE, F, ETR, ED, DUK, DIS, and ACN.
How Does Your Portfolio Compare?
Dividend growth investors may find it interesting to compare their own portfolios to the top 50 holdings of dividend ETFs. Are there any surprises? How many of the top 50 stocks do you own?
Comparing my portfolio to the top 50 holdings, I own every stock in the top 10 and 19 stocks in the top 20. Furthermore, I own 32 of the top 50 holdings.
Concluding Remarks
Publicly-available data on the top holdings and assets under management allows one to rank these holdings and to create a list of dividend growth stocks worthy of consideration.
For this article, I analyzed 50 dividend ETFs that invest in US equities and real estate stocks.
Two stocks from the Information Technology sector (AAPL, MSFT) top the list of 50 stocks presented. In fact, the Information Technology sector dominates the top 50 holdings with no fewer than 10 holdings. Below, the top 50 holdings are presented in tabular form so readers can more easily reference the data.
In Part 2 of this article, I'll showcase the top 7 stocks in each GICS sector. Investors looking to build a diversified portfolio might find such information useful.
Please note that I'm not recommending any of the top 50 holdings. Many of these stocks are trading above fair value and may not be suitable for investment at this time. Before investing in any of these stocks, please do a thorough analysis to determine if the stocks are worthy of your investment dollars.
Thanks for reading and happy investing!
Rank Freq Ticker Company Sector Years Yield 5-DGR Price FV Qual 1 26 AAPL Apple Information Technology 8 1.15% 10.8% 267.25 241 23 2 25 MSFT Microsoft Information Technology 18 1.35% 12.1% 151.38 145 25 3 19 T AT&T Communication Services 35 5.46% 2.1% 37.38 47 21 4 19 VZ Verizon Communications Communication Services 15 4.08% 2.7% 60.24 66 22 5 18 XOM Exxon Mobil Energy 37 5.11% 5.6% 68.13 84 23 6 18 JNJ Johnson & Johnson Health Care 57 2.76% 6.4% 137.49 145 25 7 17 PG Procter & Gamble Consumer Staples 63 2.44% 3.7% 122.06 109 25 8 17 CVX Chevron Energy 32 4.06% 2.8% 117.13 133 24 9 17 WFC Wells Fargo Financials 9 3.75% 7.4% 54.46 59 20 10 16 JPM JPMorgan Chase Financials 9 2.73% 12.8% 131.76 134 21 11 16 IBM International Business Machines Information Technology 24 4.82% 10.9% 134.45 166 22 12 15 INTC Intel Information Technology 5 2.17% 5.9% 58.05 61 24 13 15 ABBV AbbVie Health Care 7 5.38% 17.5% 87.73 116 17 14 14 PFE Pfizer Health Care 9 3.74% 7.2% 38.52 42 24 15 14 PLD Prologis Real Estate 6 2.32% 11.4% 91.55 74 14 16 13 PEP PepsiCo Consumer Staples 47 2.81% 9.4% 135.83 132 24 17 12 PM Philip Morris International Consumer Staples 12 5.64% 4.8% 82.93 99 19 18 12 KO Coca-Cola Consumer Staples 57 3.00% 6.9% 53.40 49 23 19 12 SPG Simon Property Real Estate 10 5.56% 12.6% 151.21 182 19 20 12 MO Altria Consumer Staples 50 6.76% 9.7% 49.70 62 17 21 12 HD Home Depot Consumer Discretionary 10 2.47% 21.4% 220.51 219 24 22 12 CSCO Cisco Systems Information Technology 9 3.09% 14.5% 45.31 50 24 23 12 MRK Merck Health Care 8 2.80% 2.2% 87.18 94 25 24 11 AMT American Tower Real Estate 9 1.78% 22.3% 214.03 189 18 25 10 CMCSA Comcast Communication Services 12 1.90% 14.2% 44.15 52 21 26 9 CAH Cardinal Health Health Care 23 3.50% 10.2% 55.03 71 17 27 9 WMT Walmart Consumer Staples 46 1.78% 2.7% 119.09 104 24 28 9 TXN Texas Instruments Information Technology 16 2.99% 19.7% 120.21 112 24 29 9 PPL PPL Utilities 18 4.85% 3.5% 34.03 37 18 30 9 SO Southern Utilities 19 4.00% 3.4% 61.99 57 19 31 8 WU Western Union Information Technology 5 2.98% 8.7% 26.88 29 16 32 8 WELL Welltower Real Estate n/a 4.11% n/a 84.57 72 12 33 7 QCOM Qualcomm Information Technology 16 2.97% 13.3% 83.55 89 18 34 7 BAC Bank of America Financials 6 2.16% 68.3% 33.32 37 19 35 7 AVB AvalonBay Communities Real Estate 8 2.84% 6.9% 214.41 198 15 36 7 V Visa Information Technology 12 0.65% 20.4% 184.51 176 25 37 7 PSA Public Storage Real Estate n/a 3.80% n/a 210.68 207 18 38 7 D Dominion Energy Utilities 16 4.42% 8.2% 83.11 86 18 39 7 LYB LyondellBasell Industries Materials 9 4.54% 14.9% 92.54 117 16 40 7 EQR Equity Residential Real Estate n/a 2.67% n/a 85.10 74 14 41 7 UNH Unitedhealth Health Care 10 1.54% 26.8% 279.87 303 24 42 7 CCI Crown Castle International Real Estate 6 3.59% n/a 133.66 115 12 43 6 AMGN Amgen Health Care 9 2.47% 22.9% 234.72 232 23 44 6 BMY Bristol-Myers Squibb Health Care 10 2.88% 2.7% 56.94 75 22 45 6 MMM 3M Industrials 61 3.39% 16.5% 169.77 178 24 46 6 LEG Leggett & Platt Consumer Discretionary 48 3.06% 4.8% 52.32 54 18 47 6 TGT Target Consumer Discretionary 52 2.11% 9.8% 125.01 117 14 48 6 CTL CenturyLink Communication Services n/a 6.90% n/a 14.49 18 4 49 6 PEAK Healthpeak Properties Real Estate n/a 4.24% n/a 34.88 30 6 50 6 AVGO Broadcom Information Technology 9 3.35% 55.1% 316.21 346 16
This article was written by
FerdiS
FerdiS invests in dividend growth stocks and writes options to boost dividend income. He manages DivGro, a portfolio of mainly dividend growth stocks created in January 2013. With investment and trading experience spanning more than 20 years, FerdiS enjoys writing articles about dividend growth investing, options trading, stock selection, portfolio management, and passive income generation. FerdiS collaborates with the founders of Portfolio Insight, an online platform for portfolio management and investment analysis. We maintain and publish Dividend Radar, a weekly free spreadsheet of dividend growth stocks.
Analyst’s Disclosure: I am/we are long AAPL, ABBV, ACN, ADM, ADP, AFL, AMGN, AMZN, ANTM, APD, AVGO, BA, BLK, BNS, CB, CMCSA, CMI, CNI, COST, CRM, CSCO, CVS, CVX, D, DGX, DIS, DLR, FDX, GD, GILD, GOOG, HD, HON, HRL, IBM, ICE, INTC, ITW, JNJ, JPM, KO, LMT, LOW, MA, MAIN, MCD, MDT, MMM, MO, MRK, MSFT, NEE, NFLX, NIE, NKE, NNN, NSRGY, O, ORCL, PEP, PFE, PG, PM, PNW, PSA, QCOM, ROST, RTN, RY, SBUX, SKT, SNA, SPG, SWK, SYK, T, TD, TJX, TROW, TRV, TSM, TXN, UNH, UNP, UPS, V, VLO, VZ, WBA, WFC, WPC, XOM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
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