What DVY actually is

DVY follows the Dow Jones U.S. Select Dividend Index. The index picks US companies with a history of paying and growing dividends, a reasonable payout ratio, and enough trading volume, and then weights them mainly by their dividend.

What is inside

Utilities, financials, consumer staples and industrials feature heavily, since those sectors pay most of the dividends. It holds fewer technology stocks than the market. Weighting by dividend means higher-yielding companies get larger weights.

Distributions

It pays quarterly, and the yield is above the market’s. A fund weighted by dividends can hold companies with high yields for the wrong reason, such as a falling price, so quality and growth matter too.

What to keep in mind

  • Sector tilt. Utilities and financials are large weights.
  • Yield focus. It may hold slow growers.
  • Overlap. Many other dividend funds hold similar companies.

Quick take

DVY is a long-running high-dividend fund with a yield tilt. Compare it with SCHD and VYM.