Mid-cap equities that pay dividends are having a hard time beating the market this year as investors turn to blue chips with dividends instead, like Apple (Apple Inc. 172,62 -0,38 -0,22%). Some ETFs have had a hard go in this space as a result.
Mid-cap stocks have commonly been called the sweet spot because of the way they are couched between large cap and small cap equities. The S&P MidCap 400 Dividend Aristocrats Index screens for two factors: quality and 15 years of consecutive dividend growth. Only 12% of midcaps make the cut.
ProShares has an ETF based on it, but it’s been a so-so year for the fund. Named after the index itself, the ProShares Dividend Aristocrats (REGL 71,80 +0,19 +0,27%) fund is the only one that tracks that index. The fund launched on Feb. 3, 2015. Since inception, it’s beaten the S&P MidCap 400 by around 500 basis points, rising 14.31% as of the end of the first quarter. Over the last 12 months ending 1Q17, REGL is up 20.81% in net asset value total return.
The actual index holds AbbieVie Inc. (ABBV 179,16 +2,11 +1,19%), AT&T (T 16,98 -0,18 -1,05%), Old Republic International (ORI 28,96 -0,26 -0,89%), Consolidated Edison (ED 88,99 -0,14 -0,16%) and National Retail Properties (NNN 41,76 -0,11 -0,26%) in its top five. By comparison, the ProShares fund holds Graco (GGG 90,93 -0,57 -0,62%), West Pharmaceutical Services (WST 354,32 +2,37 +0,67%), MSA Safety (MSA 186,12 +2,15 +1,17%), Cullen/Frost Bankers (CFR 110,73 -3,30 -2,89%) and A.O. Smith Corp. (AOS 84,50 +0,81 +0,97%). As stand alone equities, the yields aren’t much to write home about. Graco’s yield is 1.32%. West Pharma is 0.54% currently, and MSA Safety is 1.67%. CFR is the best of the lot at 2.45%.
Oddly enough, AbbieVie pays 3.81% and Old Republic pays 3.76%, meaning the index weight is better than the ETF in terms of capturing yield. At least in simple terms and when eyeing some of the top holdings.
Morningstar may have the answer. They benchmark the fund to the Russell Mid Cap Value Index, which has an average yield of 2.36% as of April 30.
So far this year, REGL is up 1.69%, but that is still underperforming the iShares Russell Mid-cap Value Index (IWS 120,93 +0,77 +0,64%) by 100 basis points based on price. The basic SPDR S&P MidCap 400 (MDY 544,00 +7,21 +1,34%) is up 3.93%. Investors are long dividend paying stocks, so the ProShares approach may be getting caught up in the fight between higher and lower yielding dividend paying companies. Some Mid-Cap Dividends Hit A Snag
Mid-cap equities that pay dividends are having a hard time beating the market this year as investors turn to blue chips with dividends instead, like Apple (Apple Inc. 172,62 -0,38 -0,22%). Some ETFs have had a hard go in this space as a result.
Mid-cap stocks have commonly been called the sweet spot because of the way they are couched between large cap and small cap equities. The S&P MidCap 400 Dividend Aristocrats Index screens for two factors: quality and 15 years of consecutive dividend growth. Only 12% of midcaps make the cut.
ProShares has an ETF based on it, but it’s been a so-so year for the fund. Named after the index itself, the ProShares Dividend Aristocrats (REGL 71,80 +0,19 +0,27%) fund is the only one that tracks that index. The fund launched on Feb. 3, 2015. Since inception, it’s beaten the S&P MidCap 400 by around 500 basis points, rising 14.31% as of the end of the first quarter. Over the last 12 months ending 1Q17, REGL is up 20.81% in net asset value total return.
The actual index holds AbbieVie Inc. (ABBV 179,16 +2,11 +1,19%), AT&T (T 16,98 -0,18 -1,05%), Old Republic International (ORI 28,96 -0,26 -0,89%), Consolidated Edison (ED 88,99 -0,14 -0,16%) and National Retail Properties (NNN 41,76 -0,11 -0,26%) in its top five. By comparison, the ProShares fund holds Graco (GGG 90,93 -0,57 -0,62%), West Pharmaceutical Services (WST 354,32 +2,37 +0,67%), MSA Safety (MSA 186,12 +2,15 +1,17%), Cullen/Frost Bankers (CFR 110,73 -3,30 -2,89%) and A.O. Smith Corp. (AOS 84,50 +0,81 +0,97%). As stand alone equities, the yields aren’t much to write home about. Graco’s yield is 1.32%. West Pharma is 0.54% currently, and MSA Safety is 1.67%. CFR is the best of the lot at 2.45%.
Oddly enough, AbbieVie pays 3.81% and Old Republic pays 3.76%, meaning the index weight is better than the ETF in terms of capturing yield. At least in simple terms and when eyeing some of the top holdings.
Morningstar may have the answer. They benchmark the fund to the Russell Mid Cap Value Index, which has an average yield of 2.36% as of April 30.
So far this year, REGL is up 1.69%, but that is still underperforming the iShares Russell Mid-cap Value Index (IWS 120,93 +0,77 +0,64%) by 100 basis points based on price. The basic SPDR S&P MidCap 400 (MDY 544,00 +7,21 +1,34%) is up 3.93%. Investors are long dividend paying stocks, so the ProShares approach may be getting caught up in the fight between higher and lower yielding dividend paying companies.