Which Is the Better High-Yield ETF?

When it comes to high-yield stock ETFs, investors often look for options that provide a reliable income stream. Two popular choices in this space are the Global X SuperDividend U.S. ETF (NYSEMKT: DIV) and the SPDR Portfolio S&P 500 High Dividend ETF (NYSEMKT: SPYD). While both ETFs aim to invest in high-yield stocks, they take slightly different approaches to achieve this goal.

SPDR Portfolio S&P 500 High Dividend ETF follows a straightforward strategy by selecting dividend-paying stocks from the S&P 500 index. The top 80 highest-yielding stocks are included in the ETF using an equal-weighting methodology. This approach ensures that each stock has an equal impact on the overall performance of the ETF. By focusing on large, economically important companies, SPDR Portfolio S&P 500 High Dividend ETF aims to reduce risk and provide a steady income stream for investors.

On the other hand, Global X SuperDividend U.S. ETF takes a more complex approach to selecting high-yield stocks. The ETF starts by screening stocks based on their beta, a measure of volatility relative to the broader market. Only stocks with betas equal to or less than 0.85 are considered for inclusion. Additionally, stocks with dividend yields below 1% or above 20% are eliminated from the selection process. The remaining stocks must have a history of paying dividends for at least two years, with the current dividend equal to or higher than 50% of the previous year’s dividend. From this pool, the top 50 highest-yielding stocks are chosen using an equal-weighting methodology.

While both ETFs focus on high-yield stocks, they have distinct differences in their selection criteria and methodologies. SPDR Portfolio S&P 500 High Dividend ETF relies on the S&P 500 index to select large, stable companies, while Global X SuperDividend U.S. ETF uses a more stringent screening process to identify lower-volatility stocks with attractive dividend yields.

In terms of performance, SPDR Portfolio S&P 500 High Dividend ETF has outperformed Global X SuperDividend U.S. ETF in terms of total return. Over the past decade, SPDR Portfolio S&P 500 High Dividend ETF has seen a significant increase in value, while Global X SuperDividend U.S. ETF has experienced a decline in value.

When it comes to dividend payments, SPDR Portfolio S&P 500 High Dividend ETF has consistently produced higher dividends compared to Global X SuperDividend U.S. ETF. This can be attributed to the ETF’s larger asset base, which allows it to generate more dividends for investors.

In conclusion, for investors looking for a reliable income stream and long-term growth potential, SPDR Portfolio S&P 500 High Dividend ETF appears to be the better choice between the two high-yield ETFs. However, investors should consider their risk tolerance and investment goals before making a decision. Both ETFs offer unique benefits and can be valuable additions to an income-focused portfolio.

Overall, understanding the differences in selection criteria and performance metrics can help investors make informed decisions when choosing between high-yield ETFs like Global X SuperDividend U.S. ETF and SPDR Portfolio S&P 500 High Dividend ETF.