Should iShares Core High Dividend ETF (HDV) Be on Your Investing Radar?
Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the iShares Core High Dividend ETF (HDV), a passively managed exchange traded fund launched on 03/29/2011.
The fund is sponsored by Blackrock. It has amassed assets over $10.07 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that find themselves in the large cap category 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.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.08%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.56%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Energy sector--about 24.40% of the portfolio. Consumer Staples and Healthcare round out the top three.
Looking at individual holdings, Exxon Mobil Corp (XOM) accounts for about 8.15% of total assets, followed by Chevron Corp (CVX) and Verizon Communications Inc (VZ).
The top 10 holdings account for about 51.06% of total assets under management.
Performance and Risk
HDV seeks to match the performance of the Morningstar Dividend Yield Focus Index before fees and expenses. The Morningstar Dividend Yield Focus Index offers exposure to high quality U.S. domiciled companies that have had strong financial health and an ability to sustain above average dividend payouts.
The ETF return is roughly 6.91% so far this year and was up about 9.47% in the last one year (as of 06/19/2024). In the past 52-week period, it has traded between $93.77 and $111.68.
The ETF has a beta of 0.80 and standard deviation of 13.41% for the trailing three-year period, making it a medium risk choice in the space. With about 82 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Core High 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, HDV is a good option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $54.96 billion in assets, Vanguard Value ETF has $116.63 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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.
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iShares Core High Dividend ETF (HDV): ETF Research Reports
Chevron Corporation (CVX) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
