Invesco High Yield Eq Div AchievTM ETF is an exchange-traded fund that invests in high-yielding stocks (PEY)
Pey is a REIT, right?
The S&P 500 and Dow Jones lost 14.3% and 12.5 percent in the fourth quarter of last year, respectively, but ETFs that include firms that have been growing dividends for a decade or longer, such as SPDR S&P Dividend ETF and ProShares S&P-500 Dividend Aristocrats ETF (NOBL), fared better. Losses of 8.5 percent and 9.7 percent were recorded by SDY and NOBL, respectively. PEY, on the other hand, underperformed its peers, with shares falling 11.6 percent during this time period, virtually matching the Dow Jones’ losses.
PEY’s underperformed the larger market during the global financial crisis of 2007-09. From October 2007 to the end of March 2009, the S&P-500 and Dow Jones sank by 48 percent and 46 percent respectively whereas PEY plunged by 65 percent in this period.
PEY’s stock selection process, I feel, is to blame for the underperformance. PEY tracks the NASDAQ US Dividend Achievers 50 Index, which includes companies with a minimum market capitalization of $1 billion that have increased regular yearly dividends for at least the last ten years. The Index selects companies that meet its market cap criterion from the broader NASDAQ US Broad Dividend Achievers Index. REITs and limited partnership units are not included in PEY. The equities are then sorted based on their trailing 12-month dividend yield, with the top 50 making up the ETF.
By capping the weight of a single stock at 4% and a single sector at 25%, PEY successfully avoids being significantly skewed towards one security or one industry. Furthermore, a single sector’s number of securities is limited to 12 equities. As a result, PEY is a fairly diversified ETF.
PEY has a number of small-cap equities, including Vector Group Ltd. (VGR), Southside Bancshares (SBSI), and Universal Corp., due to a low market cap criteria (UVV). During periods of widespread market downturn, small caps frequently underperform the broader market. The Russell 2000 Small-Cap index dropped 20% in the fourth quarter of 2018. Small-cap exposure, I believe, is one of the causes for the ETF’s poor performance. If the market turns, the fund’s performance could deteriorate once more.
What is the price of an SPHD share?
The most recent monthly dividend payment of $0.1556 per share was given to shareholders of the Invesco S&P 500 High Dividend Low Volatility ETF on Friday, January 31, 2020.