ALPS will be launching the ALPS Sector Dividend Dogs ETF (SDOG) on Friday, 29 June. SDOG will track the S-Network Dividend Dogs Index (SDOGX), currently the highest yielding Equity Dividend Index.
SDOG applies the ‘Dogs of the Dow Theory’ equally across all 10 sectors of the S&P 500. By applying ‘Dogs’ theory to a wider universe, SDOG provides investors with exposure to high yielding equities while also maintaining sector and stock diversification.
At a high level the index utilises a unique but straightforward design:
S&P 500 Universe
Dogs of the Dow theory applied to all 10 sectors of the S&P 500
Equal weight methodology at both the Sector and Stock level – 10% exposure to each sector and 2% exposure to each security
For investors that are seeking a high level of equity income, ALPS believe the SDOGX Index has several attractive and differentiating factors.
Highest yielding dividend index – 5.02% vs closes competitor of 4.11% as of 21 June, 2012
Higher quality universe – Starting with a high quality universe like the S&P 500 diminishes the likelihood of troubled and financially distressed companies entering the index
Sector diversification – Many dividend oriented indices are heavily concentrated in Utilities, Financials, or Healthcare. SDOGX provides high dividend exposure across all 10 sectors of the market
Stock diversification – Many dividend oriented indices are heavily concentrated in higher yielding individual names. SDOGX equally weights all securities in the index, minimising concentrated positions
Straightforward portfolio construction – Unlike many dividend indices which apply a black-box theory to selecting dividend paying stocks, SDOGX simply applies the time-tested theory of Dow Dogs across a broader and more diversified universe.