ETF providers Advisors Asset Management (AAM) is to enter the ETF market with the launch of two dividend ETFs focusing on income and value, seeking to help investors meet their current cash flow and future capital appreciation goals.
The AAM S&P 500 High Dividend Value ETF (NYSE: SPDV) targets attractively valued US large cap stocks that exhibit both a high dividend yield and sustainable dividend distribution characteristics.
The AAM S&P Emerging Markets High Dividend Value ETF (NYSE: EEMD) targets attractively valued emerging market stocks that exhibit both a high dividend yield and sustainable dividend distribution characteristics.
“We are excited to enter the ETF market,” says Lance McGray, Managing Director, Head of ETF Product at AAM. “For nearly two decades AAM has offered investors innovative income generating solutions and these ETFs are the most recent addition to our diverse product suite.”
At the core of these ETFs is the S&P Dividend and Free Cash Flow Yield Index series, which are designed to balance current cash flow with future capital growth. To accomplish this, the underlying index series focuses on two key valuation indicators to identify sustainable dividend-paying stocks offering fundamental value: dividend yield and free cash flow yield.
McGray adds: “Reaching for the highest yielding stocks is not always the best course of action. Just as important as the actual dividend yield is the sustainability of that dividend. In our opinion, Free Cash Flow yield is an ideal indicator of dividend sustainability, and when coupled with Dividend yield in the selection process, the result can be powerful. This may help investors not only meet their current cash flow needs, but also potentially provide future capital growth.”
In addition to providing all the potential benefits of an ETF, including low cost, tax efficiency, transparency and flexibility, SPDV and EEMD target five stocks from each GICS sector, with the goal of providing investors a full range of sustainable dividend opportunities.
“There has been massive growth within the ETF industry and we are excited to be part of the ETF landscape. We have aligned ourselves with leading service providers, including S&P Dow Jones and The New York Stock Exchange, and are committed to offering specialized solutions to our financial advisor partners,” says AAM President Andrew S Williams. “We will continue to provide offerings such as these ETFs to empower advisors to broaden their portfolios, while potentially meeting their clients’ income challenge.”