First Trust Rising Dividend Achievers ETF (RDVY)RDVY

Overview of First Trust Rising Dividend Achievers ETF (NYSEARCA: RDVY)

Profile:

First Trust Rising Dividend Achievers ETF (RDVY) is a passively managed exchange-traded fund that tracks the NASDAQ Rising Dividend Achievers Index. This index comprises US companies with a history of consistently increasing their dividend payments for at least 10 consecutive years. In other words, RDVY focuses on the large-cap US equity market with a value tilt towards companies with a strong track record of dividend growth.

Objective:

The primary objective of RDVY is to provide investors with exposure to a portfolio of companies that have a history of increasing their dividends. This makes it suitable for investors seeking income generation and long-term capital appreciation through dividend growth.

Issuer:

• First Trust Advisors L.P.: A leading asset management firm with over $170 billion in assets under management as of January 31, 2023. The firm has a strong reputation and a long history of managing ETFs and mutual funds.

• Management: The ETF is managed by a team of experienced portfolio managers with expertise in equity investing and dividend strategies.

Market Share:

RDVY has a market share of approximately 0.5% in the U.S. dividend-focused ETF category.

Total Net Assets:

As of February 23, 2023, RDVY has total net assets of approximately $1.44 billion.

Moat:

• Unique Strategy: RDVY's focus on companies with a history of rising dividends differentiates it from other dividend-focused ETFs that may include companies with stagnant or declining payouts.
• Strong Track Record: The underlying index has outperformed the S&P 500 over the past 10 years.
• Low Cost: The ETF has an expense ratio of 0.60%, which is below the average for its category.

Financial Performance:

• Historical Performance: RDVY has an annualized return of 10.7% since its inception in 2013, outperforming the S&P 500's 9.5% return over the same period.
• Benchmark Comparison: RDVY has outperformed the NASDAQ Rising Dividend Achievers Index by a small margin over the past 5 years.

Growth Trajectory:

The ETF has experienced steady growth in assets under management, indicating increasing investor interest in its strategy.

Liquidity:

• Average Trading Volume: RDVY has an average daily trading volume of approximately 100,000 shares, providing sufficient liquidity for most investors.
• Bid-Ask Spread: The bid-ask spread is typically tight, indicating low trading costs.

Market Dynamics:

Favorable market dynamics for RDVY include:

• Low Interest Rates: Investors seeking income may turn to dividend-paying stocks in a low-interest-rate environment.
• Focus on Value Stocks: Value stocks, like the ones RDVY holds, tend to outperform during economic recoveries.

Competitors:

• Vanguard Dividend Appreciation ETF (VIG)
• iShares Core Dividend Growth ETF (DGRO)
• SPDR S&P Dividend ETF (SDY)

Expense Ratio:

0.60%

Investment Approach and Strategy:

• Strategy: Tracks the NASDAQ Rising Dividend Achievers Index.
• Composition: Invests in large-cap U.S. stocks with a history of increasing dividends.

Key Points:

• Provides exposure to companies with a strong track record of dividend growth.
• Offers diversification across various sectors.
• Has a lower expense ratio than many competitors.
• Outperformed the S&P 500 over the long term.

Risks:

• Volatility: The ETF's value can fluctuate with the overall stock market.
• Dividend Risk: Companies may reduce or suspend dividend payments in the future.
• Sector Concentration: The ETF's focus on large-cap value stocks may underperform other sectors during certain market conditions.

Who Should Consider Investing:

• Investors seeking income generation through dividends.
• Investors with a long-term investment horizon.
• Investors comfortable with moderate volatility.

Fundamental Rating Based on AI:

7/10

RDVY's strong track record, competitive expense ratio, and unique focus on rising dividend payers make it an attractive option for income-seeking investors. However, its sector concentration and reliance on company dividend policies introduce some risk.

Resources:

• First Trust website: https://www.ftportfolios.com/
• ETF.com: https://www.etf.com/RDVY#overview
• Morningstar: https://www.morningstar.com/etfs/arcx/rdvy/portfolio

Disclaimer:

This information is provided for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.