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DVY holds over $21B in assets with a yield of 3.61%, 53% of which is concentrated in the financials and utilities sector.
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Ford, the fund’s largest holding, suspended its dividend for 2020-2021. Pfizer’s 99% payout ratio needs monitoring.
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Most holding companies maintain payout ratios below 80%. Diversification across 100 stocks reduces risk for individual companies.
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this iShares Select Dividend ETFs (NYSEARCA: DVY ) has become a cornerstone holding for income-focused retirees seeking reliable dividend income. The fund’s yield of 3.61% is nearly three times the return of the S&P 500, while still holding 100 dividend-paying U.S. stocks. The ETF’s appeal goes beyond yield: DVY has appreciated 13% over the past year, and when dividends are included, the total return is nearly 17%.
DVY’s income comes entirely from dividends paid on its underlying equity holdings. The fund tracks an index of high-dividend-yielding U.S. stocks selected based on dividend sustainability metrics. With more than $21 billion in assets and a low expense ratio of 0.38%, DVY is heavily concentrated in defensive sectors, with financials and utilities making up 53% of the portfolio. This industry allocation prioritizes stable, established companies with strong dividend records over high-growth businesses.
The fund’s dividend security depends on its maximum position. Here are the top five holdings:
Ford Motor (NYSE: F), the maximum shareholding ratio is 2.75%, the yield is 4.57%, and the dividend payout ratio is a conservative 51%. However, Ford suspended its dividend entirely from 2020 to 2021, raising concerns about reliability during economic stress. The company has maintained steady payments since resuming in late 2021.
Altria Group (NYSE:MO) of 2.36% represents the fund’s most reliable source of income. With a 7.08% yield and a 78% payout ratio, Altria has consistently increased its dividend every year for more than 15 years, even during financial crises and pandemics. The company’s 44% profit margin provides a huge cushion.
Verizon (NYSE:VZ) contributed 1.81% of assets, with a yield of 6.69% and a dividend payout ratio of 58%. The telecom giant’s recurring subscription revenue and 14.4% margin support dividend sustainability, while its low beta of 0.32 provides stability.
Seagate Technology (NASDAQ: STX) and Pfizer (NYSE:PFE) into the top five. Seagate’s 37% payout ratio provides a significant margin of safety, while Pfizer’s 99% payout ratio is worth monitoring despite the company’s strong balance sheet.
