Investors look to dividends for current income, bolstering portfolios and finances in times of uncertainty. Plenty of ETFs can provide that current income in efficient, helpful ETF wrappers, but perhaps one of the areas where those funds set themselves apart is in the performance potential they can provide, too. FDVV, for example, offers some appealing stocks alongside their current income stability.
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(FDVV ), the Fidelity High Dividend ETF, charges a 16 basis point fee for its approach. The strategy tracks the Fidelity High Dividend IndexSM for that cost, a list of large- and midcap dividend providers. Rather than track a large list, the dividends ETF focuses on a smaller group of names. The strategy has returned 10.89% YTD according to ETF Database, beating its ETF Database Category average in that time.
In terms of its main goal, then, how has the strategy performed? According to Fidelity Investments, the strategy has provided a 2.97% distribution yield. It also offered a 2.78% 30-day SEC Unsubsidized Yield, as of August 25. The fund, then, can provide some helpful current income. What’s intriguing about the fund, however, are the stocks that have performed well even while providing a stabilizing role.
The Hershey Co. (HSY), for example, has returned a punchy 8.6% YTD per YCharts. The chocolate and sweets company provided a 34.6% return on equity as of August 22. It also offered a 26% year-over-year (YoY) revenue growth. In the last three months, particularly, it returned 19.5%, 10% more than the S&P 500 Total Return Index (SPXTR).
Next, one might look to an intriguing utilities name — which may line up with rampant electricity demand. AES Corp. (AES) has returned 29.7% over the last three months, according to YCharts. That follows an overall 5.6% YTD performance, interestingly, with the fund spiking in a surprising way for utilities.
Financials holding company Citigroup (C) has returned 34.4% YTD, a strong performance in that time alongside its dividend offerings. With 10.55% five-year revenue growth, the recent spike follows some solid numbers.
Looking ahead, then, FDVV can appeal as a dividends ETF that can sometimes offer more. Rather than simply hold a fixed income strategy for payouts, for example, a dividend ETF like FDVV could be worth a closer look.
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Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.
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