AAM S&P 500 High Dividend Value ETF

SPDV

Market cap $73.8M

SPDV is comprised of 5 stocks from each of the 11 GICS sectors, with selections based on dividend yield and free cash flow yield. I estimate a 3.88% forward yield. Total returns since its inception were poor, with my previous review revealing low growth and low quality. However, those metrics have improved, resulting in an upgraded "hold" rating. Even so, SPDV has quality deficiencies compared to the 3.86%-yielding SCHD, and its dividend growth features are poor and inconsistent due to its reconstitution process.

Global dividends hit a record high in 2024, with $606.1 billion paid in Q2 alone, as tech giants like Meta and Alibaba entered the dividend-paying market. Equity yields remain low compared to bonds, with the FTSE All-World index yielding 1.86% in September 2024, while the FTSE World Government Bond index yield to maturity stood at 3.03%. Dividend-focused strategies can enhance income potential in equity portfolios by prioritising high-dividend-paying sectors and reducing risks of dividend cuts.

The last 12 months have been difficult for equity income investors. The top 20% of dividend-paying stocks in the S&P 500 Index have returned 13.5% in the 12 months through March.

Dividend stocks, including REITs and utilities, have underperformed in recent years. Rising interest rates and increasing costs of capital have contributed to the underperformance. The beginnings of a strong dividend stock rally may have just begun on the back of some very good news.