ETF Talk: Patience Pays in Spades

“I learned that all things come to those who wait — provided they hustle while they wait.”

— James Cash Penney, American businessman, entrepreneur and founder of JCPenney

The market over the last six months has required us to have a lot of patience. With changing tariff deadlines and global conflicts, headlines have kept investors on their toes.

While I am no stranger to the hustle and to working hard for what I have earned, I can also recognize that making money work for you is essential to making huge profits. And today’s exchange-traded fund (ETF) could interest investors who see the value in steady, long-term wealth building.

This week’s ETF is the SPDR S&P Dividend ETF (SDY), which is designed to measure the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have a managed-dividends policy of consistently increasing dividends every year for at least 20 years in a row. For reference, the S&P Composite 1500 combines the S&P 500, the S&P MidCap 400 and the S&P SmallCap 600, which covers approximately 90% of U.S. market capitalization.

SDY tracks the S&P High Yield Dividend Aristocrats Index. Stocks within this index are weighted by indicated yield (annualized gross dividend payment per share divided by price per share) and weight-adjusted each quarter.

The fund is part of the Mid-Cap Value category, with a one-year return of 7.81%, which is double the one-year return of 3.77% in the category. The fund rewards those who wait, or rather, high-yielding companies that have proven their increasing dividends for at least the 20-year mark.

Exclusive ETF Talk: Finding Value in Your Brokerage

Chart courtesy of www.stockcharts.com

The chart above shows that while the ETF took a dip right around “Liberation Day,” when President Trump launched widespread tariffs on imports, it has rebounded nicely in the last few months. While there is still uncertainty around the next tariff deadline, investors can note the upward climb of SDY.

The top 10 holdings of SDY are Verizon Communications Inc. (2.47%), Realty Income Corporation (2.17%), Microchip Technology Incorporated (2.02%), Target Corporation (1.76%), Chevron Corporation (1.64%), Kimberly-Clark Corporation (1.53%), Texas Instruments Incorporated (1.46%), Kenvue Inc. (1.43%), Eversource Energy (1.43%) and NextEra Energy, Inc. (1.35%).

This investing opportunity allows for exposure into a variety of sectors and stocks, including Industrials, Consumer Defensive, Utilities, Technology, Financial Services, Basic Materials, Real Estate and Energy. Instead of having to pick a specific part of the market to focus on, or assume the risk of choosing singular stocks, profit-seekers can have their hand in several parts of the market.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Forecasts & Strategies, Tactical Trader, TNT Trader, Five Star Trader, Bullseye Stock Trader, and The Deep Woods. His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.