SDVY Profile
The First Trust SMID Cap Rising Dividend Achievers ETF seeks to provide investors with exposure to a diversified portfolio of small and mid-cap companies that have demonstrated a history of increasing their dividends. Under normal market conditions, the fund allocates at least 90% of its net assets, including any investment borrowings, to common stocks included in the index it tracks. This index is specifically designed to capture the performance of 100 small and mid-cap companies that not only pay dividends but have a consistent record of raising their dividend payouts over time.
The fund’s underlying index targets companies thatexhibit strong fundamentals and have a proven ability to enhance shareholder returns through regular dividend increases. By focusing on small and mid-cap firms, the ETF aims to identify companies with potential for growth and financial stability that are less covered by traditional dividend-focused strategies. The inclusion criteria for the index emphasize companies that not only have a history of rising dividends but also demonstrate the capacity to continue such practices in the future, reflecting both past performance and future prospects.
Investors in this ETF gain access to a diversified selection of smaller companies that are typically underrepresented in larger, more traditional dividend-focused funds. The fund’s strategy is designed to balance the potential for capital appreciation with income generation through dividends, offering a unique blend of growth and yield. The ETF provides a targeted approach to dividend investing by focusing on companies with a proven track record of increasing dividends, which can be appealing to investors seeking both income and growth opportunities.
The emphasis on small and mid-cap companies introduces specific risks, including higher volatility compared to large-cap stocks and potential sensitivity to economic fluctuations. Additionally, the ETF’s focus on dividend-growing firms means that it may not capture the full spectrum of high-yield dividend stocks, as it prioritizes dividend growth over current yield. Despite these risks, the fund offers a compelling option for investors looking to diversify their portfolios with equities that combine the potential for growth with a history of rewarding shareholders through increasing dividends.
|
