Markets

Dividend ETF Offers Fresh Take On Blue Chip Dow Stocks

Shutterstock photo

A new ETF targets the highest-yielding stocks in Dow Jones Industrial Average. A dividend-focused approach to that iconic index may enhance performance over time.

Guggenheim Dow Jones Industrial Average Dividend ( DJD ) holds the 30 megacap U.S. companies found in the Dow.

So doesSPDR Dow Jones Industrial Average ( DIA ), the $12.84 billion exchange traded fund that launched in 1998.

But unlike that venerable peer, the new ETF weights each stock by dividend yield rather than price.

Its top three holdings areChevron ( CVX ),Verizon ( VZ ) andGeneral Electric ( GE ).

The top three holdings in DIA areGoldman Sachs (GS),3M (MMM) andBoeing (BA).

"This strategic beta approach to the Dow Jones Industrial Average should be of interest to investors as reinvested dividends historically have been a significant source of the DJIA's total return," said William Belden, managing director at Guggenheim Investments.

The innovative new ETF launched Dec. 16.

Guggenheim helped to pioneer strategic or smart beta investing in 2003 with the launch of Guggenheim S&P 500 Equal Weight (RSP).

DJD has a 0.30% expense ratio vs. 0.17% for DIA.

The new ETF's top sector weightings are industrials and technology at 18% each, followed by health care at 13%.

Its older peer DIA is a proven ETF strategy for successful investing .

DIA produced an 11% annual average gain over the past five years. It's given up roughly 2% year to date. Its dividend yield is 2.89%.

One of the most widely followed benchmarks, the Dow was created in 1896 and is regarded by many as a barometer of the U.S. stock market .

Follow Aparna Narayanan on Twitter @IBD_ANarayanan .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

GE DIA CVX DJD VZ

Other Topics

ETFs