iShares Dow Jones Select Dividend Index (DVY)

[Hillbilly]

Hope this is the proper place to ask about the subject ETF. If not, sorry Martha, my bad.

I am much interested from those that own DVY, the following:

1. Why to you have it? For the dividends? CG? Both? What influenced you most to purchase it?
2. What are your (return,risk, income) expectations? per year?
3. It seems to be about 50% financials & 15% utilities sector wise invested per MS. How does this effect, if any, the way you invest outside this ETF?
4. What % of your overall port. is invested in DVY?
5. When was your first purchase? How often do you add money, if any?
6. Do you consider this ETF a core holding and plan to hold over 10 years?
7. At what performance level would you sell? (Ex. 3 years lagging S&P 500?)
8. What do you do with the dividends?

Thanks for the input. Hillbilly

 

[soupcxan]

I hold Vanguards Equity Income fund (VEIPX) which is similar to DVY but not quite as highly concentrated in financials. That's why I decided on it over DVY.

 

[ziggy29]

Agreed about the financials, though I think now isn't a terrible time to get into some of them -- they've already been whacked 50% and if you could stomach volatility in the meantime, I think for the bigger names in the space patience will be rewarded.

PEY is even more concentrated in financials than DVY, I believe.

 

[cute fuzzy bunny]

they've already been whacked 50%

Not really seeing the value. DVY is back to roughly where it was 2 years ago before a bunch of false profits (heh) from bad mortgage loans on behalf of the financials drove up the price.

So I'm not seeing it as a bargain, just maybe fairly priced (again).

But if you want to stick some money in something, get a predictable income stream, and promise to not look at the NAV...its a good choice. A better one now than 2 years ago.

 

[Nords]

1. Why to you have it? For the dividends? CG? Both? What influenced you most to purchase it?

Dividends and a decent screening process, plus a lot lower ER than we'd seen in other choices (up until we bought it). A big influence on our thinking was favorable dividend taxes and Siegel's "The Future For Investors".

2. What are your (return,risk, income) expectations? per year?

~3% steady dividends without much price fluctuation. Decent large-cap value investments. Long-term growth (decades). Of course our initial purchase was at $55/share and I don't think we'll see that price again-- this year anyway. I'd expect it to be a lot less volatile than an international index or a small-cap value ETF.

3. It seems to be about 50% financials & 15% utilities sector wise invested per MS. How does this effect, if any, the way you invest outside this ETF?

Today we have 23% in Berkshire Hathaway, 23% in small-cap value (mostly IJS), and 23% in international dividends (mostly PID). We're in the middle of rebalancing and just sold about a third of our Berkshire shares. When we're done rebalancing, the last 8% of our portfolio will be in cash and a big chunk of our expenses are paid by my govt pension. We're more focused on DVY's large-cap allocation and its dividends than on the sectors.

4. What % of your overall port. is invested in DVY?

14% now and ramping up to 23% over the next few weeks. It'll be interesting to see how low they can go!

5. When was your first purchase? How often do you add money, if any?

Four years ago. From here out we only expect to add shares during rebalancing.

6. Do you consider this ETF a core holding and plan to hold over 10 years?

Yup.

7. At what performance level would you sell? (Ex. 3 years lagging S&P 500?)

Nope. The idea of the ETF is that it's already picked the winners according to dividend longevity & increases. I'd only compare it to a similar index (certainly not the S&P500) and even then I wouldn't get my knickers in a knot unless something came out with a lot less than a 0.40% ER.

Well, actually I'd sell if I was rebalancing because it had grown to over 28% of the ER portfolio. But it'd have to be on a real tear (or the rest of the portfolio would have to take a catastrophic hit) for that to happen.

8. What do you do with the dividends?

Reinvest. We turned that off for a bit last year to replenish our cash stash but I suspect the market will make reinvestment seem compelling for at least the next couple of years.

 

[JPatrick]

During the period ~Oct 05 thru ~Jul 06 I used DVY as a buy the stock write the near term OOTM call. This produced some pretty good income from call premiums, a couple of dividends, and short term cap gains. I gave it up when the stock made its' move to the 70's.
I don't find this ETF real appealing at present, but should we see the light at the end of the financial tunnel someday I might be tempted.

 

[Hillbilly]

I'm making my first purchase of DVY on Monday (3/17). The current yield of around 4.25% sure helps with my decision along with the past income growth. DVY will most likely over time (few years) become the core of my holdings for retirement. Thanks to all that replied!!

Hillbilly

 

[ziggy29]

If the financials in DVY don't erode significantly from here, and a large portion of dividends aren't slashed, the current yield on DVY would make it a good equity/income play.