I enjoy a cup of tea, but not all investments are my “cup of tea.” As an idiom, if something is not your cup of tea, you do not like it, or you are not interested in it. I have ETF’s that are my cup of tea and others are not. HDV is in the middle ground for me. It is OK, but it isn’t my favorite. After reviewing this again for this blog, I sold all shares in our accounts at a profit. Here is why I sold the shares:
Dividends are an important component in any investment strategy. Therefore, an ETF that focuses on dividend-paying stocks is worthy of consideration. HDV has these attributes:
Total Assets of 7.01 Billion, a dividend yield of 3.34%, a turnover ratio of 46.00% and a very acceptable expense ratio of 0.08%.
It isn’t surprising to see companies in HDV that pay a higher yield. The top ten companies in this ETF are:
Exxon Mobil Corp XOM; Verizon Communications Inc VZ; JPMorgan Chase & Co JPM; Johnson & Johnson JNJ; Chevron Corp CVX; Pfizer Inc PFE; Procter & Gamble Co PG; Cisco Systems Inc CSCO; Coca-Cola Co KO; Merck & Co Inc MRK
While I would not own shares of JPM, PG, MRK or KO, having them as a diversified set of income-producing stocks is a desirable thing. But notice two things about this ETF. 1) It has a higher turnover ratio. That may be OK if the stocks the manager is selling and buying are good investments purchased and sold opportunistically. I prefer a lower turnover ratio. 2) Notice also that the dividends dropped in 2016. If you are a dividend growth investor, then HDV might not be your cup of tea. I prefer VYM.