One Seeking Alpha author, FerdiS writes about dividend growth investments. FerdiS examined the top 50 holdings of 50 dividend-paying ETFs to see what the overlap was. He says “Comparing my portfolio to the top holdings of dividend ETFs is informative, as it helps me to identify candidate stocks for analysis and possible investment.”
Later in his post he says, “The top-ranked stock is Apple (AAPL), which appeared in the top 25 holdings of 26 of the 50 ETFs. The runner-up is Microsoft (MSFT) with 25 appearances, followed by AT&T (T) and Verizon Communications (VZ), each with 19 appearances.”
There are several things I observe in looking at the top ten. I highlighted the ETF ticker symbols for the ETFs I use in our own accounts, including the accounts for my wife’s mother and for our grandchildren. The first thing I see is that Vanguard owns the top four positions. Vanguard offers excellent ETFs with low expense ratios and good results. iShares has three in the top ten, and I generally recommend DVY and DGRO.
Notice fund FVD. The expense ratio is higher than the others, and the dividend yield isn’t as good as some other choices. However, the 5-year return is quite good at 64%. But DGRO has a better dividend yield and a 5-year return of 73%.
Usually I don’t invest in ETF’s or mutual funds where the expense ratio eats up most of the dividend yield. However, if your goal is growth and then the dividend yield, don’t exclude other investments from your portfolio. And take the time to notice the overlap of investments in your ETF or mutual fund choices. It doesn’t pay to buy all ten of the top ten only to create complexity that adds questionable value to your investment portfolio.
Link to Seeking Alpha article: http://www.seekingalpha.com/article/4309867-top-holdings-dividend-etfs-part-1-top-50-november-2019