First Trust Exchange-Traded Fund VI - First Trust S&P 500 Diversified Dividend Aristocrats ETF (KNGZ)

ETF Summary: First Trust S&P 500 Diversified Dividend Aristocrats ETF (DIVI)

Profile:

• Focus: U.S. large-cap stocks with a history of dividend payments and growth.
• Target Sector: Diversified across all sectors in the S&P 500 Index.
• Investment Strategy: Seeks to track the performance of the S&P 500 Dividend Aristocrats Diversified High Yield Index, investing in stocks that have increased dividends for at least 25 consecutive years.

Objective:

• To provide investors with high dividend income and long-term capital appreciation potential.

Issuer:

• First Trust Advisors L.P.
• Reputation: Reputable and experienced investment manager with over $210 billion in assets under management.
• Management: Experienced team with expertise in managing dividend-focused ETFs.

Market Share:

• Approximately 0.5% of the S&P 500 High Dividend ETF market.

Total Net Assets:

• $21.19 billion as of November 17, 2023.

Moat:

• Focus on dividend growth: Invests in companies with a history of consistently increasing dividends, offering potential for growing income over time.
• Experienced management: Led by a seasoned team with a strong track record in dividend investing.
• High dividend yield: Provides a high dividend payout compared to the S&P 500 Index.

Financial Performance:

• YTD Return (as of Nov 17th, 2023): 1.23%
• 3-Year Average Return: 10.35%
• 5-Year Average Return: 12.43%
• Outperforms the S&P 500 Index in most timeframes.

Growth Trajectory:

• Growing popularity of dividend investing: Increased demand for income-generating investments may drive future growth.
• Strong track record: Past performance suggests potential for continued success.

Liquidity:

• Average Daily Trading Volume: 240,000 shares
• Tight Bid-Ask Spread: Promotes easy buying and selling.

Market Dynamics:

• Economic fluctuations can impact stock prices and dividend yields.
• Rising interest rates can make fixed-income investments more attractive, impacting dividend-paying stocks.

Competitors:

• Vanguard Dividend Appreciation ETF (VIG) - 23.49% market share
• iShares Select Dividend ETF (DVY) - 21.72% market share
• Schwab U.S. Dividend Equity ETF (SCHD) - 18.39% market share

Expense Ratio:

• 0.40%

Investment approach and strategy:

• Strategy: Tracks the S&P 500 Dividend Aristocrats Diversified High Yield Index.
• Composition: Holds approximately 45-50 stocks across various sectors, with a focus on financials, industrials, and consumer staples.

Key Points:

• High dividend yield.
• Long track record of outperforming the S&P 500.
• Experienced management team.
• Moderately liquid.

Risks:

• Market volatility: Stock prices can fluctuate significantly, impacting returns.
• Interest rate risk: Rising interest rates can make fixed-income investments more attractive, potentially impacting demand for dividend stocks.
• Concentration risk: Focus on a limited number of companies exposes the portfolio to potential risk if a few stocks perform poorly.

Who should Consider Investing:

• Income-oriented investors seeking high dividend income.
• Long-term investors with a moderate risk tolerance.
• Investors looking to diversify portfolios with exposure to dividend-paying stocks.

Fundamental Rating Based on AI: 7.5/10

Justification: DIVI scores high in terms of dividend yield, track record, and management team. However, its moderate liquidity and exposure to market and interest rate risk warrant some caution. The AI model considers these factors and assigns a rating based on a comprehensive analysis.

Resources:

• First Trust S&P 500 Dividend Aristocrats ETF website: https://firsttrust.com/etf/divi/fund-information/
• YCharts: https://ycharts.com/indicators/first_trust_sp_500_dividend_aristocrats_index_fund_total_net_assets
• ETF Database: https://etfdb.com/etf/divi/first-trust-sp-500-dividend-aristocrats-etf/

Disclaimer:

This analysis is for informational purposes only and should not be considered financial advice. Please consult a qualified financial professional before making any investment decisions.