First Trust Rising Dividend Achievers ETF (RDVY)

Overview

The First Trust Rising Dividend Achievers ETF (RDVY) focuses on investing in companies with a history of raising dividends. It selects stocks based on dividend growth, payout ratio, and volatility criteria. The ETF aims to provide investors with a growing stream of income and potential capital appreciation. RDVY concentrates on dividend achievers, excluding REITs.

Reputation and Reliability

First Trust is a well-established ETF provider with a solid reputation for innovative investment strategies.

Management Expertise

First Trust has experienced portfolio managers and analysts specializing in dividend-focused and factor-based investing.

Goal

To provide investment results that correspond generally to the price and yield of an equity index called the NASDAQ US Rising Dividend Achievers Index.

Investment Approach and Strategy

Strategy: The ETF tracks the NASDAQ US Rising Dividend Achievers Index, which selects companies based on dividend increase consistency and financial health.

Composition The ETF primarily holds common stocks of U.S. companies that have a history of increasing dividends.

Market Share: RDVY holds a moderate market share within the dividend ETF sector.

Total Net Assets (AUM): 2450000000

Key Competitors

• Vanguard Dividend Appreciation ETF (VIG)
• Schwab US Dividend Equity ETF (SCHD)
• iShares Core Dividend Growth ETF (DGRO)

Competitive Landscape

The dividend ETF market is highly competitive, with several large players like Vanguard and Schwab offering similar products with lower expense ratios. RDVY differentiates itself with its unique dividend selection methodology focusing on dividend growth and financial metrics. RDVY has higher expense ratio, leading to disadvantages against its competitiors.

Historical Performance: RDVY has demonstrated competitive returns compared to its peers over the long term, but performance can fluctuate based on market conditions.

Benchmark Comparison: The ETF generally tracks its underlying index closely. Deviations may occur due to expenses and portfolio adjustments.

Expense Ratio: 0.0059

Average Trading Volume

RDVY exhibits reasonable liquidity with a sufficient average trading volume for most investors.

Bid-Ask Spread

The bid-ask spread is generally tight, indicating efficient trading conditions.

Market Environment Factors

RDVY is influenced by economic growth, interest rates, and dividend policies of the underlying companies. Positive economic conditions generally support dividend growth.

Growth Trajectory

RDVY's growth depends on the continued ability of companies to increase their dividends. The ETF is subject to changes in the index methodology and company-specific events.

Competitive Edge

RDVY's competitive advantage lies in its focus on dividend growth rather than just high dividend yield and its unique weighting scheme. It screens for companies with a consistent history of raising dividends and good financial health, potentially leading to more sustainable dividend income. Its methodology seeks to avoid dividend traps by focusing on companies that are more likely to continue increasing dividends. This approach can attract investors seeking long-term dividend growth and stability.

Volatility

RDVY's volatility is moderate, reflecting the volatility of the underlying equities. Dividend stocks can be less volatile than growth stocks, but still subject to market fluctuations.

Market Risk

The ETF is subject to market risk, including economic downturns, sector-specific risks, and changes in dividend policies. Interest rate risk can affect the valuation of dividend-paying stocks.

Ideal Investor Profile

RDVY is suitable for investors seeking a growing stream of dividend income and long-term capital appreciation. It is appropriate for investors who are comfortable with moderate risk and have a long-term investment horizon.

Market Risk

RDVY is best suited for long-term investors looking for dividend growth. It is less suitable for active traders seeking short-term gains.

The First Trust Rising Dividend Achievers ETF (RDVY) offers exposure to companies with a history of increasing dividends, providing a growing income stream and potential capital appreciation. It tracks the NASDAQ US Rising Dividend Achievers Index, using a unique dividend selection methodology. RDVY is suitable for long-term investors looking for dividend growth, but faces competition from larger, lower-cost dividend ETFs. Its expense ratio is higher than some competitors, but its distinctive focus on dividend growth and financial health may justify the cost for some investors.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar
• etfdb.com

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Market data and share are as of late 2023 and are subject to change.