Simple Fund Analysis – DVY

   

When I first started investing in the stock market, I was all about stocks, stocks, STOCKS! They seemed more exciting to me as they focus on one company, what it’s done, what it’s doing, and what it’s planning on doing. Usually I selected companies that delivered end-user products because I’m a direct consumer and thus can say have first-hand experience. As I evolve (just a little bit at a time), I’m diversifying more into funds, ETFs and index funds that is. A side note I recently learned is that the difference between an ETF and index funds is that the former trade like a stock and have no minimums. The latter are priced at the end of the day and they usually have a minimum amount of money you need to invest to get into the fund – I’ve found around $3,000 based on my limited research (see more information about the differences at Diff Between ETF and Index Fund).

 

So, I decided it makes sense to do a simple analysis on a fund I recently found and am contemplating to invest in – iShares Select Dividend ETF, symbol DVY. Before you go any further, please know that I am not a professional investment advisor, do not any special investment certifications, degrees, etc. and finally am not employed or receiving compensation (sigh) from anyone affiliated with DVY.

 

DVY – Great Factors to Consider  

One of the reasons I was interested in DVY is that it pays a high divided (3%). The stocks I have purchased in the past have been mostly divided paying cause I likey to see the income coming in, even though I reinvest it into some more stock. DVY has been paying a dividend CONSISTENTLY since 2004. The fund has been around since 2003, so well over 10 years which gives me some comfort, plus I’ve read in financial publications in the past that it is recommended to invest in a fund with some history and track record (see chart below from Yahoo Finance):

 

Fees – as you can see from the chart above, the expense ratio is .39%. This is actually comparable to the best ETFs mentioned by Kiplinger in the article/link below. With the exception of Schwab U.S. Dividend Equity ETF – SCHD with a fee .07% and Vanguard Dividend Appreciation ETF – VIG with a fee of .10. However, to those I would say that SCHD has been in inception only since 2011 so does not meet my longevity requirement. The dividend for VIG is a bit lower at 2.05% VS the DVY divided at 3.04%.

 

Furthermore another metric I can throw out there, which I just learned about (see learning is fun) is why the P/E ratio would be N/A. So for both SCHD and VIG, per Yahoo Finance this is N/A. As you can see from DVY’s chart above, its P/E is 15.07. Investopedia states that N/A in the P/E ratio field could be of either a newly listed company, but both of these have been around for a several years. The second is that the P/E ratio is negative. It goes on to further say that “Investors can interpret seeing the “N/A” as the company reporting a net loss, and should be aware they are buying shares of a company that is losing money per share of its stock” (Why P/E Ratio is N/A).

 

DVY – List of Top Holdings

Consistent with my past methodology, DVY is comprised of some large companies. In a quick Google Search, the top five holdings here ALL pay a nice divided with the highest out of the top five being Chevron Corporation with a 3.96% yield. See the list of top 10 holdings below (click to expand)

 

DVY – Management & Dividend

I’ve noticed that people focus on the management team when it comes to investing in a stock or fund. This makes sense since you want someone managing your money that has a proven track record, credentials etc. For DVY, there are four Portfolio Managers and all four have been with BlackRock Fund Advisors (the general investment advisor company DVY is in) for 10 years or more per DVY’s prospectus. One gentleman, Alan Mason has been with BFA since 1991 – 26 years. BFA itself is a huge company that provides investment advisory for assets over $4.89 trillion.

 

Providing more comfort is the fact that Kiplinger has rated DVY in the top 8 Best Funds For Retirees (Kiplinger – 8 Best Funds) stating DVY has “maintained or increased dividends over the past five years…..and returned 12.7% annualized, beating the S&P 500 by an average of 1.6 percentage points per year.” All in all, this seems like a solid fund. I haven’t come across any negative news; fees seem appropriate, it has tons of money, has been around for 10+ years and pays some income.

 

 

 

SMM BOOK RECOMMENDATIONS:

 

RICHEST MAN IN BABYLON


NO NONSENSE GUIDE TO BUILDING WEALTH


THE LIES ABOUT MONEY

 

CLARK HOWARD LIVING LARGE IN LEAN TIMES


SUZE ORMAN THE MONEY CLASS

Simple Money Man (SMM)

9 Comments

  1. I bought stocks for Snapchat. It’s not doing well. I regret it lol. Don’t judge me 🙈

  2. Nice analysis. I agree DVY looks like a solid fund based on the points you noted above. It pays a great dividend which I really like and the top 10 holdings are all companies that are established, with strong track records. I’m really glad you researched and noted the low expense ratio on this fund. So many people overlook the expense ratio and just look at the historical return. I say the expense ratio is just as important as the return since a high expense ratio can quickly cut into the return the fund generates. Keep up the great work!

    • Thank you for stopping by. Yes why should we pay more in those fees than we need to! lol. If you’re getting more (in terms or return in the medium term and long term and maybe even dividends) for less, it’s like buying something on sale….well sort of :-).

  3. Excellent post.
    Here in Europe, we have ETF that capitalize and others that distribute dividends. The capitalize are more efficient in tax terms. So I tend to chose those.
    Thanks for sharing.

  4. Good read. I prefer index funds. Two funds that I really like are the Schwab® S&P 500 Index Fund & Schwab Total Stock Market Index Fund. Expense ratio is the lowest in the business. What’s your take on these funds?

    • I’d have to do a detailed analysis to provide any kind of opinion. Generally, I am for index funds because of their low fees and automatic diversification anyway. Just at a glance the 500 index schwab has been around for well over 10 years so that’s definite plus. Thanks for stopping by!

  5. Great analysis on DVY!!! I definitely need to look further into this as I wouldn’t mind loading my portfolio up on some dividend paying etfs 🙂 Thanks for sharing!!!

    • Thanks MSM! It’s a pretty big fund, of course offers diversification, low fees and dividend. So I thought why not discuss a positive investment. I’m glad you enjoyed it.

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