First Trust Rising Dividend Achievers ETF (RDVY)RDVY

ETF First Trust Rising Dividend Achievers ETF (RDVY) Summary

Profile:

The First Trust Rising Dividend Achievers ETF is a passively managed exchange-traded fund that invests in U.S. large-cap stocks with a history of increasing dividends. The ETF tracks the NASDAQ Rising Dividend Achievers Index, which selects companies that have increased their dividends for at least ten consecutive years.

Objective:

The primary investment objective of RDVY is to provide current income and capital appreciation through investment in a portfolio of dividend-paying equities.

Issuer:

The issuer of RDVY is First Trust Advisors L.P. (FTA), a leading provider of exchange-traded funds and other investment products.

• Reputation and Reliability: FTA is a well-established and reputable firm with a long track record of managing ETFs.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in dividend investing.

Market Share:

RDVY has a market share of 0.38% in the U.S. large-cap value ETF category.

Total Net Assets:

As of November 10, 2023, RDVY has total net assets of $1.2 billion.

Moat:

• Unique Strategy: RDVY focuses on a specific niche of dividend-paying stocks with a history of increasing dividends, which differentiates it from other large-cap value ETFs.
• Index Tracking: By tracking an established index, the ETF benefits from diversification and eliminates the need for active stock selection.
• Low Cost: The expense ratio of 0.35% is relatively low compared to other ETFs in its category.

Financial Performance:

• Historical Performance: RDVY has delivered a compound annual growth rate (CAGR) of 11.6% since inception (2006).
• Benchmark Comparison: Over the past 3 years, RDVY has outperformed the S&P 500 Index by 2.5% per year.

Growth Trajectory:

The ETF has shown consistent growth in assets under management over the past few years, indicating increasing investor interest.

Liquidity:

• Average Trading Volume: The average daily trading volume of RDVY is approximately 145,000 shares, providing good liquidity.
• Bid-Ask Spread: The bid-ask spread is typically tight, around 0.03%, indicating low trading costs.

Market Dynamics:

• Economic Indicators: Rising interest rates could make dividend-paying stocks less attractive, potentially impacting the ETF's performance.
• Sector Growth Prospects: The value sector is expected to perform well in a rising interest rate environment, potentially benefiting the ETF.
• Current Market Conditions: Market volatility and geopolitical uncertainties could impact the ETF's performance.

Competitors:

• Vanguard Dividend Appreciation ETF (VIG) - Market Share: 32.5%
• iShares Core Dividend Growth ETF (DGRO) - Market Share: 11.2%
• Schwab U.S. Dividend Equity ETF (SCHD) - Market Share: 9.1%

Expense Ratio:

The expense ratio of RDVY is 0.35%.

Investment Approach and Strategy:

• Strategy: RDVY tracks the NASDAQ Rising Dividend Achievers Index, passively investing in its constituent stocks.
• Composition: The ETF primarily holds large-cap U.S. stocks across various sectors, with a focus on companies with a history of increasing dividends.

Key Points:

• Invests in large-cap stocks with a history of increasing dividends.
• Provides current income and capital appreciation.
• Low expense ratio and good liquidity.
• Outperformed the S&P 500 Index in recent years.

Risks:

• Market Risk: The ETF's performance is tied to the performance of the underlying stocks, which can be volatile.
• Interest Rate Risk: Rising interest rates could make dividend-paying stocks less attractive, potentially impacting the ETF's performance.
• Dividend Risk: Companies may reduce or eliminate their dividends, impacting the ETF's income stream.

Who Should Consider Investing:

• Investors seeking current income and capital appreciation from dividend-paying stocks.
• Investors with a long-term investment horizon.
• Investors who are comfortable with moderate market volatility.

Fundamental Rating Based on AI:

Based on an AI-powered analysis considering financial health, market position, and future prospects, RDVY receives a 7 out of 10 rating. The ETF benefits from its unique strategy, low cost, and consistent performance. However, potential risks like market volatility and interest rate sensitivity need to be considered.

Resources and Disclaimers:

This analysis used data from the following sources:

• First Trust website
• ETF.com
• Morningstar

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