Should Invesco Dow Jones Industrial Average Dividend ETF (DJD) Be on Your Investing Radar?

Zacks Equity Research
·3-min read

The Invesco Dow Jones Industrial Average Dividend ETF (DJD) was launched on 12/16/2015, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Blend segment of the US equity market.

The fund is sponsored by Invesco. It has amassed assets over $295.16 million, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.57%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 15.80% of the portfolio. Healthcare and Financials round out the top three.

Looking at individual holdings, Verizon Communications Inc (VZ) accounts for about 10.22% of total assets, followed by 3m Co (MMM) and Dow Inc (DOW).

The top 10 holdings account for about 60.95% of total assets under management.

Performance and Risk

DJD seeks to match the performance of the Dow Jones Industrial Average Yield Weighted index before fees and expenses. The Dow Jones Industrial Average Yield Weighted Index provides exposure to high-yielding equity securities in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months.

The ETF has gained about 5.53% so far this year and was up about 17.25% in the last one year (as of 06/25/2024). In the past 52-week period, it has traded between $39.87 and $48.72.

The ETF has a beta of 0.82 and standard deviation of 13.75% for the trailing three-year period. With about 29 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dow Jones Industrial Average Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, DJD is a reasonable option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $481.64 billion in assets, SPDR S&P 500 ETF has $521.50 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Invesco Dow Jones Industrial Average Dividend ETF (DJD): ETF Research Reports

Verizon Communications Inc. (VZ) : Free Stock Analysis Report

3M Company (MMM) : Free Stock Analysis Report

Dow Inc. (DOW) : Free Stock Analysis Report

SPDR S&P 500 ETF (SPY): ETF Research Reports

iShares Core S&P 500 ETF (IVV): ETF Research Reports

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