First Trust Advisors L.P., begun trading a new US Small Mid Cap Rising Dividend ETF, the First Trust SMID Cap Rising Dividend Achievers ETF (Nasdaq: SDVY), on Thursday, November 02, 2017. Here is a synopsis of the new ETF:
|Name: First Trust SMID Cap Rising Dividend Achievers ETF
|Net Expense Ratio: 0.60%
The First Trust SMID Cap Rising Dividend Achievers ETF seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an index called the NASDAQ US Small Mid Cap Rising Dividend Achievers Index.
The NASDAQ US Small Mid Cap Rising Dividend Achievers Index is composed of the securities of 100 small and mid cap companies with a history of raising their dividends and exhibit the characteristics to continue to do so in the future. The Index is designed to provide access to a portfolio of small and mid capitalization income producing securities. The Fund, using an indexing investment approach, attempts to replicate, before fees and expenses, the performance of the Index. First Trust AdvisorsL.P., the Fund’s investment advisor, seeks a correlation of 0.95 or better (before fees and expenses) between the Fund’s performance and the performance of the Index; a figure of 1.00 would represent perfect correlation. The Index is owned and was developed by Nasdaq,Inc. (IndexProvider). The Index Provider also calculates and maintains the Index. The Index is designed to provide access to a diversified portfolio of small and mid cap companies with a history of paying dividends. The Index Provider defines small and mid cap companies as those in the bottom 25% of total market capitalization in the NASDAQ US Benchmark Index, a float adjusted market capitalization-weighted index designed to track the performance of U.S. equity securities. The Index methodology also considers each company’s earnings growth and compares the level of cash held by the company with its debt profile.
As of September 29, 2017, the Index was comprised of 100 common stocks traded on U.S. exchanges, with market capitalizations ranging from $801 million to $16.18 billion. As of September29,2017, the Fund had significant investments in consumer discretionary, financial and industrials companies.
To be eligible fo rinclusion in the Index, a security must meet the following criteria:
• be a member of the NASDAQ US BenchmarkIndex (NQUSB);
• not be classified as Real Estate Investment Trust according to the Industry Classification Benchmark (ICB:8670);
• not be classified as large cap by the Index Provider
• have a minimum 3-month average daily dollar trading value of $2 million;
• have a minimum market capitalization of $500 million;
• have paid a dividend in the trailing 12 months greater than the dividend paid in the trailing 12-month period 3 and 5 years prior;
• having earnings per share in the most recent fiscal year greater than the earnings per share the 3 fiscal years prior;
• have a cash-to-debt ratio greater than 25%; and
• have a trailing 12-month payout ratio (trailing 12-month dividends per share divided by trailing 12-month earnings per share) no greater than 65%.
The Index Provider reconstitutes the Index components annually in March of each year for eligibility, using market data through the end of December.
The Index is rebalanced quarterly. Rebalancing is effective as of the market close of the third Friday in March, June, September and December. The Index Provider may, from time to time, exercise reasonable discretion as it deems appropriate in order to ensure Index integrity. Ordinarily, a security will be removed from the Index at its last sale price.
FUND TOP 10 HOLDINGS (11/02/17):
|Cabot Microelectronics Corporation
|Universal Forest Products, Inc.
|The Greenbrier Companies, Inc.
|Capella Education Company
|Kelly Services, Inc.
|EMCOR Group, Inc.
|CSG Systems International, Inc.
|Marriott Vacations Worldwide Corporation
SDVY Home Page
Category: Equities> Regions> USA> US Income> US Dividends
Here is a comment from Ryan Issakainen, CFA, Senior Vice President, ETF Strategist at First Trust:
High quality dividends are often associated with larger, well-established companies. However, smaller companies with strong balance sheets and financial flexibility may also provide a good source of income as well as capital appreciation and dividend growth potential. “In our opinion, dividends are often a sign of strong corporate health, and dividend increases may signal growing confidence from management. While many dividend ETFs focus on large-cap stocks, we believe strong dividend policies are just as important for small- and mid-cap stocks. This ETF seeks to provide exposure to small- and mid-cap stocks that may be well-positioned for dividend growth.”