Is there any good source of monthly dividend income?


To me an ideal stock investment should have around 10% annual growth and about 2-4% dividend yield. One good thing about this combination is that even the stock market crashes (like 2008), most probably that 2-4% dividend yield will somewhat minimize the loss. Another beauty is that, if I reinvest the dividend in that time, I could buy more of same stock compared to regular period.

Today I will talk about an ETF that is growing about 10% annually for last five years with about 4.4% dividend yield . Additionally this ETF disburses dividend monthly (($0.15/share/month) so its a convenient source of monthly income. Currently I am just reinvesting automatically whatever the dividend amount disbursed in my brokerage account.


Image result for sphd etf

Invesco S&P 500® High Dividend Low Volatility ETF (SPHD)

There are two qualities of SPHD that are worth highlighting. Firstly,  all the stocks are in this ETF are S&P 500 companies, hence they are all large companies. Secondly, they are the lowest volatile in the index, hence more stable during down market.
Last time, I checked its trading at $43 with an expense ratio of 0.30%. So for every $1000 of my investment, I am getting about $44 equivalent of dividend while paying about $3 as management fee. Although I like management fee not more that 0.15%, but comparing the qualities of this ETF, its not that bad:)
To check if a stock or ETF is overvalued, I look into the Price/Earning Ratio (P/E). Historically a reasonable P/E should be around 15. Currently SPHD has a P/E of 14.87, so I  guess this is not overvalued like many other stocks or ETFs in this bull market.
Here is the growth of a hypothetical growth of $10000 invested since 2013. The growth rate of SPHD is quite similar of S&P 500 index since 2013. 


The top three sector exposures are in Real Estate, Financial and Utilities sectors. 
Individual holdings wise, there are no single companies above 5% allocation. I guess this is good amount of diversification without too much dependency on any single company.

I am adding this ETF to my portfolio at regular interval and holding it as part of my long term investment.

Disclaimer: This article shows my personal opinion. This is no way professional financial advice. You may seek professional advice or conduct own research before investment.


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