We’ve written about dividend ETFs before but one we haven’t directly covered is the Satrix Dividend Plus ((STXDIV).
While other dividend focused ETFs either use the dividend as a quality metric or for historic dividend yield this ETF uses a forward dividend yield for inclusion in the ETF.
In this way, it is in a sense a contrarian ETF and should have a low correlation with the overall market in that it’s including shares that have seen either the price beaten down (but dividend unchanged) or one which one expects will see a markedly increased dividend. The third category is of course those high paying dividend stocks.
The risk here is that it uses the forward dividend yield which is the consensus amongst analysts as to what the next dividend payment will be. The risk is they could be wrong, dividends can be scrapped altogether or cut by the board.
It will also at times have a high number of resource stocks such as we’ve been seeing lately due to the high dividends being paid.
The ETF consists of thirty stocks and uses the top 100 stocks as its universe and pays dividends received (after costs) every quarter.
As the chart below shows it does beat the Satrix40 at times (2009 – 2013 and again 2016 – 2018) while usually also paying a higher dividend yield.
|ETF name||Satrix Dividend Plus|
|Issue date||29 August 2007|
|Total investment cost||0.59%|
|ETF Benchmark||FTSE/JSE Dividend Plus index (J259)|
|Tax-free savings account||Allowed|
|ETF major holdings||RBPlats, Impala, Northam, Exxaro, BHP,
British American Tobacco, African Rainbow,
Anglo Plat, Nedbank & Sasol.
|Performance 1 year||+32.3%|
|Performance 3 years||+27.2%|
|Performance 5 years||+46.0%|
|Performance 10 years||+65.7%|
At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.