This ETF offers exposure to a strategy that is largely similar to the popular “Dogs of the Dow” approach that involves a portfolio consisting of the ten components of the Dow Jones Industrial Average with the highest dividend yields. SDOG, however, casts a much wider net by drawing from the S&P 500 as its universe of potential stocks. The fund is also unique in that it maintains equal allocations to each of ten sectors; that makes it very different from many dividend-focused products, which tend to have biases towards utilities and financials. The portfolio also consists of equal weighting to each individual component stocks, which might be appealing to those who favor equal weight strategies.
SDOG can be a useful tool for achieving a diverse portfolio of large cap U.S. stocks while also seeking to capture a meaningful dividend yield. SDOG will generally maintain a dividend yield that is much greater than the S&P 500, and will often exceed many other dividend-focused ETFs as well. One potential caveat is the possibility of falling into “value trap” stocks that have high yields that result from deteriorating business models and depressed stock prices. However, since the universe is the S&P 500, component stocks are more likely to be generally stable, large companies.
SDOG is more expensive than some other funds in the Large Cap Value Equities ETFdb Category, but still features a relatively low expense ratio given the specialized objective. For investors interested in a refined, logical way to target yield, this ETF is certainly an interesting option.