Is State Street SPDR S&P Dividend ETF (SDY) a Strong ETF Right Now?

Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the State Street SPDR S&P Dividend ETF (SDY) is a smart beta exchange traded fund launched on 11/08/2005.What Are Smart Beta ETFs?Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.Fund Sponsor & IndexManaged by State Street Investment Management, SDY has amassed assets over $20.02 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, SDY seeks to match the performance of the S&P High Yield Dividend Aristocrats Index.The S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years.Cost & Other ExpensesSince cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.Operating expenses on an annual basis are 0.35% for SDY, making it on par with most peer products in the space.SDY's 12-month trailing dividend yield is 2.60%.Sector Exposure and Top HoldingsEven though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.SDY's heaviest allocation is in the Industrials sector, which is about 19.2% of the portfolio. Its Consumer Staples and Utilities round out the top three.Taking into account individual holdings, Verizon Communications Inc (VZ) accounts for about 2.51% of the fund's total assets, followed by Realty Income Corp (O) and Chevron Corp (CVX).The top 10 holdings account for about 18.84% of total assets under management.Performance and RiskSo far this year, SDY return is roughly 8.04%, and is up about 1.6% in the last one year (as of 12/05/2025). During this past 52-week period, the fund has traded between $121.58 and $142.97.The fund has a beta of 0.76 and standard deviation of 12.80% for the trailing three-year period, which makes SDY a medium risk choice in this particular space. With about 152 holdings, it effectively diversifies company-specific risk .AlternativesState Street SPDR S&P Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $71.34 billion in assets, Vanguard Value ETF has $155.38 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.04%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap ValueBottom LineTo 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.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>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 State Street SPDR S&P Dividend ETF (SDY): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks