Hi I'm Jimmy in this video
we're going to walk through three
solid dividend
ETFs that are all based on the S&P
500.
First we're going to compare each
of the different ETF to each other
and then we're going to look at what
they invest in what makes them
unique and then hopefully going to
come up with something that will be
valuable to each of our portfolios.
OK. The first dividend ETF
is the S&P 500.
Dividend Aristocrats Etf
Ticker symbol NOBL
the second one is the spider
S&P 500.
High Dividend ETF their ticker
symbols as SPYD.
And then the third one is a fairly
new ETF called the AAA
and S&P 500
high dividend value ETF
their ticker symbol SPDV.
So the first thing I think is
important for us to go through is
some of the key data and I think
that this data is important to go
through for almost any ETF an ETF
analysis that we might be doing.
So the first one is fees.
Now the dividend aristocrats
ETF NOBL their
fee is about 35 basis points.
So that's about one third of one
percent then SPYD
they have a fee of about 12 basis
points and SPDV has
a fee of about twenty nine basis
points then make it jump over to
holdings.
Now we know that each of these three
ETF s are based off of the S&P
500 and they're all dividend
ETF's but we might be surprised
to learn that they don't they don't
not all compile the same way.
So NOBL has
58 different dividend paying
stocks within the ETF
SPYD has eighty one and then SPDV
has about fifty six.
Now we jump to dividend yield.
So they all pay a quarterly dividend
so that's reasonable then for
NOBL they have a dividend yield
of about 2.5 percent
SPYD has almost
double that at four point six
percent and SPDV
comes in at about four point three
percent. So now it's important to
look at what types of companies
each of these dividend ETF are
holding.
One way to do that at least one way
to look at the value component of
this is what is the weighted average
price to earnings ratio for each
of these ETF s.
So if we were to look at the PE
ratio for NOBL
NOBL comes in at about 18 x
SPYD comes ahead our 14
x an SPDV comes
in at 12x now just so we
all have a benchmark for these
numbers. Right now the S&P 500
is trading at about 18 and a half
times earnings.
So they're PE is about
18.5x. So the dividend aristocrats
ETF NOBL they're coming
in slightly better than that because
it's a little bit lower while SPYD
is even better and SPDV
at just 12 x implies
that they seem to it seems to make
sense that they are calling
themselves a high dividend value
ETF because they appear to be a
value right now.
Now we could shift over to the
weighted average market cap of the
holdings within the ETF.
So NOBL has an average
market cap of four point three
billion dollars SPYD is
a little bit smaller at three point
two billion and SPDV
is the smallest at about two point
seven billion dollars.
So it seems that NOBL is going
after the larger more established
companies while the high dividend
value ETF SPDV
is clearly going after smaller
companies. That seems to be trading
at a value.
We saw that because of their low PE
ratio and then SPYD
seems to fall somewhere in the
middle. Now another interesting
point that I came across when I was
looking at each of these dividend
ETF s was how much
they have in assets under management
so NOBL has about four point seven
billion dollars invested
SPYD has about one point five
billion and SPDV
has just over 32 million.
Now I bring this up because I think
that often there's a
misunderstanding as to the
importance of assets under
management in an ETF
at least I misunderstood it when
I first started.
So I figure there is at least a few
people that were in the same boat as
me. Ok so my first thought was OK.
Clearly the company that manages
ETF is making their money is
bringing in their revenue based off
of their fee and in the case of SPDV
that fee is twenty nine basis
points. So let's say they have about
thirty two million dollars.
That would mean that they're
bringing in less than one hundred
thousand dollars a year in annual
revenue.
So I'm sure that that
company has expenses but
what are they.
And does that hundred thousand
dollars make them profitable.
Do they have other forms of revenue
if they don't.
What happens if they went under.
What happens to the money that we
invested in the ETF.
Do we lose that money.
Well it turns out that
if the company went out of business
or if the ETF were shut down for
whatever the reason that money would
simply get returned to us.
So one of the advantages
of ETF's in general is
that the price of the ETF is based
on the ETF holdings.
So there are two prices for an ETF
that would be interesting to any of
us. And the first is
the net asset value or NAV
and then there's the actual price of
the ETF that would pay on the Stock
Exchange usually these
two numbers are very very close to
each other. So if the company
that controlled the ETF went out of
business and they shut down the ETF
or if they shut down the ETF for
some other reason While the fund
would actually be liquidated at
the current net asset value price.
So in theory that
would be what we got back minus
any costs of selling the actual
shares within the fund.
Either way the point is that
if a ETF was shut down or a company
were to go out of business we would
essentially get back to net asset
value of that.
So the amount of assets under
management has no direct impact
on the liquidity of the ETF itself
but there is something else
called ETF implied liquidity.
And this is key for any ETF
if we happen to be investing a large
amount of money into a single ETF.
Now basically what that is
is that ETF implied liquidity
looks at that all the companies
in the ETF and how
much somebody could buy
of that ETF before they meaningfully
have a impact on
the least volatile company
in the ETF.
The least liquid company
in the ETF.
So since you're buying the ETF and
they are therefore buying the shares
of the company that are supposed
to be in that ETF.
How much money can you invest before
you eventually start impacting
the underlying companies.
Now for what we're looking at here
because the companies that are in
each of these dividend ETF s
are so large and they are so liquid
they're all part of the S&P 500.
Well it would take a ton of money
to impact the liquidity of
any of the underlying holdings of
these ETF S..
So to illustrate that if we do look
at SPDV they actually
have the highest of all the implied
liquidity of these three companies
because it would take more than 900
million dollars before
it would have a meaningful impact
on the underlying holdings the least
liquid underlying holding NOBL
and SPYD are both
in the 700 million dollar range.
So ETF implied liquidity can be an
important thing to look up.
You can usually find that at the
fund's site but
in a big fund like this is
probably wont matter too much. But if you
were to go ahead and look
for particularly for smaller
cap companies that perhaps don't
trade as much with if you found
an ETF that had a smaller number
of holdings it might be something to
look for. Okay now so quickly the
broad holdings of each of these
dividend ETF.
So this is NOBL and as
we could see NOBL is fairly
well spread out amongst the
different sectors where they're
mostly in consumer staples and
industrials and anybody not familiar
with the dividend aristocrats ETF.
Well this ETF focuses on companies
in the S&P 500 then to be
considered a dividend aristocrat.
They must have increased their
dividend every year for
at least twenty five consecutive
years.
Then they have to have a minimum
market cap and a minimum liquidity
requirements and then this
ETF needs to have at least 40
holdings in.
These are the companies that are in
the dividend aristocrats ETF.
And one interesting point that I
noticed was that this dividend
aristocrats ETF has fifty eight
companies in it and out of the fifty
eight companies forty eight of them
are not in either of the other two
ETF.
I was surprised by that.
I didn't expect to see that number
being so high.
So I'm a big fan of the dividend
aristocrats ETF.
It's a well diversified portfolio.
It holds a lot of high quality names
as we saw larger market cap names
in the other two ETF.
But their dividend yield
is not quite as high as the other
ones. So if more yield is what
you're after here's SPYD.
And once again it's a well
diversified portfolio except now
real estate is where they
concentrate for companies to get
into this dividend ETF.
They must once again be in the S&P
500.
But here's where it gets
interesting.
If you saw one of our recent videos
where we talked about the truth of
dividends and then we broke out the
S&P 500 into four quadrants
ranked by dividend and then back
tested those quadrants to see how
they did against each other.
Well it turns out that the second
most quadrant we found ranked
by dividend had performed the best
but the first quadrant wasn't
too far behind in most of the time
periods that we analyzed.
This ETF works in much
of the same way as we had laid
out except they go after the
first quadrant.
The primary difference between our
analysis and they're what they've
done is that they excluded
companies that didn't pay dividends
from the entire universe.
And then they broke it out by
different groups.
So this is a pretty good ETF.
It's got a higher yield than our
dividend aristocrats ETF.
It's got a bit more exposure to
real estate which explains the
higher yield since more real estate
investment trust would be included
with them. So that's something that
interests us.
This could be a good place to look.
OK. Then we could jump over the SPDC
right away. We might notice that
this is a much more balanced ETF
than the other two.
Basically what they do is they pick
the top five companies from
each of the eleven gics sectors
and then they they rank those they
pick them according to their
dividend yield and their free cash
flow yield.
So for anybody curious what free
cash flow yield is.
Well basically we take the free cash
flow per share.
We divide it by the price per share.
So if a company generated
10 dollars in free cash
flow per share and then they would
be trading at one hundred dollars
per share what we'd take the 10
divided by 100.
We end up with a 10 percent free
cash flow yield.
So if that same company the stock
price would fall from one hundred
down to 50 well now 10 divided by
50. You end up with a 20 percent
free cash flow yield.
So clearly the higher the better for
free cash flow.
So the fact that SPDV focuses
on the dividend yield and the
free cash flow yield.
Well it would make a lot of sense
that they would be chasing both
dividends and value.
And I'm actually surprised that this
fund doesn't have more assets in
it because to me it looks well-built
and it seems like a high quality
fund. OK.
So I think that each of our dividend
ETF s bring something different to
the table. So the dividend
aristocrats ETF NOBL
well they bring size they
bring quality they bring a history
of dividend growth which I think
is a great thing SPDV.
Well they bring that with a value
component and they bring
in the introduction of the free cash
flow to the whole mix which I also
think is a great thing.
I'm a big fan of free cash flow.
They also go after a slightly
smaller market cap so that might be
something for us to keep in mind.
But if we want something sort
of in the middle between those those
two SPYD Well
they have more holdings and
they end up in a sort of a
mid range between the two ETF.
Plus we sell it they have a tilt
towards real estate.
So if that's something that we're
after that could be a good plan.
So if you have any dividend ETF s
that I didn't mention here that you
really like please put them
in the comments below I'm very
curious to see what everybody's
favorite dividend ETF is I love
looking at these to see how they
break them down I think that can add
a lot of value to what we do.
So they haven't done so yet get the
subscribe button hit the thumbs up.
Thank you for so much for sticking
with me all the way into the video
and I'll see in the next video.
Thanks.