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A Detailed Overview of SDY’s Holdings

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SDY’s investment methodology

The SPDR S&P Dividend ETF (SDY) is a smart beta ETF that is based on the S&P High Yield Dividend Aristocrats Index. According to the prospectus of the fund, “Stocks included in the Index should have both capital growth and dividend income characteristics, as opposed to stocks that are pure yield, or pure capital oriented, and must meet minimum float-adjusted market capitalization and liquidity requirements.”

The dividend yield of each stock is calculated by dividing the annualized gross dividend payment of the stock by its current share price.

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Major components

As of November 2015, SDY manages a total portfolio of $13.1 billion, distributed majorly over the financials, industrials, and consumer staples sectors. The ETF has a net expense ratio of 0.35%. The top holdings of SDY include AT&T (T), Realty Income (O), Caterpillar (CAT), and ExxonMobil (XOM).

Moving averages and earnings

The financials sector is the largest constituent of SDY, representing 25% of its portfolio. SDY’s financials segment is trading above its 20-day, 50-day, and 100-day moving averages by 2.0%, 3.3%, and 2.6%, respectively. The whole financial sector of the market has reported weak earnings in 3Q15 missing analyst estimates by 1.1%.

The industrials sector, which is the second-largest component of SDY, has seen a drop in its sales by 1.2% in 3Q15 from its previous quarter, reducing SDY’s performance in the market as a whole. The industrials segment of SDY is trading above its 100-day and 20-day moving averages by 2.2% and 0.87%, respectively.

In the next part of the series, we’ll discuss the potential effects of adding SDY to your portfolio.

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