ProShares Russell 2000 Dividend Growers ETF

SMDV

Market cap $703M

I am downgrading ProShares Russell 2000 Dividend Growers ETF from Buy to Hold due to downside risk and negative projected return over the next six months. SMDV has rallied significantly but continues to lag both the S&P 500 and Russell 2000 over longer periods, holding stocks with a median P/E of 15.9x and a 2.9% yield. The ETF is unique for its small-cap, dividend-growth focus but currently trades near all-time highs, making it less attractive versus alternatives like REGL and NOBL.

Designed to provide broad exposure to the Style Box - Small Cap Value category of the market, the ProShares Russell 2000 Dividend Growers ETF (SMDV) is a smart beta exchange traded fund launched on 02/03/2015.

Advisor clients have myriad goals and needs for their portfolios — but this year, delivering on them has gotten more complicated. Events in the Middle East will likely spur inflation for the rest of 2026.

Launched on 02/03/2015, the ProShares Russell 2000 Dividend Growers ETF (SMDV) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Value category of the market.

The ProShares Russell 2000 Dividend Growers ETF (SMDV) is rated 'Hold' due to recent underperformance compared to peers and negative dividend growth. SMDV's defensive small-cap tilt and financial sector concentration have lagged peers with higher tech and growth exposure. Trailing twelve-month dividend growth for SMDV is -8.54%, with zero consecutive years of growth, diminishing its income growth appeal.

SMDV has paid a dividend every single quarter since launching in February 2015, through a pandemic, a rate-hiking cycle, and a regional banking scare.

Making its debut on 02/03/2015, smart beta exchange traded fund ProShares Russell 2000 Dividend Growers ETF (SMDV) provides investors broad exposure to the Style Box - Small Cap Value category of the market.

ProShares Russell 2000 Dividend Growers ETF (SMDV) remains attractive despite its recent rally and lagging performance versus large-cap dividend ETFs. SMDV offers unique small-cap dividend growth exposure, low tech weighting, and sector diversification versus large-cap-focused peers. I favor SMDV as a contrarian play, benefiting from improved M&A activity and the underperformance of small-caps relative to large-caps.

The ProShares Russell 2000 Dividend Growers ETF (SMDV) made its debut on 02/03/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Value category of the market.

The Russell 2000 Dividend Growers ETF offers a defensive, income-focused small-cap strategy with a strong tilt toward financials, utilities, and industrials. SMDV trades at an 11% P/E discount to the Russell 2000, boasts a 2.6% yield, and demonstrates superior profitability metrics but lags in sales growth. Performance has consistently trailed the Russell 2000 and peers, with limited upside capture in rallies.