ETF Battles: A Dividend Income Duel with CGDV vs. DIVO vs. FDVV!

historically dividends have played a significant role in the total returns of the S&P 500 over long periods of time dividends for example have contributed to roughly 30 to 40% of the total returns of the S&P 500 well that means that a substantial portion of the indexes overall performance can be attributed to reinvested dividends rather than solely on capital appreciation today's audience requested dividend ETF battle is between three ETFs from amplify the Capital group and Fidelity so which ETF is the best choice find out right after this a cordial welcome to all you're watching ETF battles we're in season 6 and I'm Ronda legi if you're new to the program welcome aboard be sure to hit that subscribe button to join our community and also hit the like button if you've been enjoying the show if there's a certain ETF contest that you'd like to see send me your ticker symbols in the comment section below or on our X feed at etfguide we could do double triple and quadruple head headers so make it good don't forget to visit the description section below we've got links to our program judges along with our program sponsor Direction so be sure to get in touch we've also got lots of viewer Resources with links to free audio and ebooks so don't miss it so today's dividend ETF bout was requested by a viewer named Regal Garcia and it's between a dividend paying ETFs from amplify the capital group and Fidelity and uh boy boy this is going to be a good one there's a lot of interest in dividend paying ETFs so how will this go down helping us to sort through it is a Duo extraordinaire we've got Shaina ciso with banry and Capital Management and David Durkin with the street.com judges great to see you again happy to be here yeah great to see you too so our four battle categories are cost exposure strategy we've got performance and yield combined and then we've got our mystery battle category mystery is of course where our judges can surprise us with any factor or thing that they feel is important to today's contest our judges can also nominate Wild Card ETFs if they feel there's better choices elsewhere I've got the scoreking chores and at the end of the program we'll declare an overall winner remember that none of the battle outcomes that we ever do on this program are ever predetermined to know known in advance by myself or our judges well let's kick things off with the first category cost Shaina please get us started all right um so for once Dave is I'm in Dave's World this is h a little um different than the traditional alt battles uh but um I take the challenge and when I look at this um from an expense ratio stand point fdvv which is the Fidelity Fund at 16th basis points is the cheapest fund now it it doesn't have the best trading spread um that actually belongs to CG DV at one cent but the difference in the overall expense ratio is so significant then it more than overcomes that so for me it's Fidelity fdvv uh at 16 basis points Dave you're up next on cost how do you see it well Shane I appreciate your kind words I'm still honored to be in the presence of the queen of alts oh stop um yeah I I agree fdvv uh at 16 basis points is is my winner um you know I think liquidity is still pretty good on on all of these funds uh cgdb like Shaya said is is the uh has the narrowest spread out of them but uh as far as pure expense ratio I think we'll keep it simple uh the Fidelity Fund is the winner exposure strategy is the next category and Dave you're still up so break it down for us well actually Ron I was in a battle a little while ago where CGV was included as well so um I will make the same complaint today as I did then excuse me and that's to say that I don't like the strategy uh of the fund where it says it targets companies that pay dividends or may pay dividends and basically that just means you know it can include non-dividend payers obviously in there and I don't think that you necessarily want that kind of strategy if you're looking at a dividend paying fund now granted if you look at the portfolio the vast majority of them are dividend payers so you are getting uh kind of a large capap Dividend Fund in there but um you know the last time I looked at this portfolio it had it had meta it had Google it had Salesforce these are all before they were paying dividends and obviously uh meta and Google are playing uh are paying dividends now but even in the portfolio today there's Amazon there's Uber and it's like these companies aren't paying dividends um you know I I just don't understand why they're in there I know it gives it a bit of a different profile but I like my dividend ETFs to be kind of pure plays and CG DV just isn't quite there um fdvv has kind of a similar problem uh if you if you look at the index it it targets it looks 70% yield 15% on the payout ratio 15% on dividend growth and how selects companies so uh you have the heavy tilt on yield obviously but you do get a bit of a dividend growth and quality component in there as well but the issue I have with this fund is that its waiting strategy once it gets those companies it heavily tilts towards cap waiting and what that does is it lifts the mega caps up to the top of the portfolio regardless of what they're paying and if you look at the top four Holdings of fdvv it's Apple it's Nidia it's Microsoft soft and is broadcom those four companies account for nearly 20% of the portfolio and broadcom is the only one that's paying even a 1% yield right now so you know it doesn't really it doesn't really line up with the high yield nature of the fund now if you look at the fund overall I'm getting a little ahead of myself here but uh it pays a 2.7% yield so it isn't above average yield but I just don't like how it's uh it it it just doesn't allocate properly according to I think what the true objective of the fund should be now dvo is a little different uh that's a concentrated portfolio that focuses on dividend payers dividend grow stocks and then it layers the covered call strategy on select stocks on top of that to to give it the big yield and this takes more of a traditional kind of quality approach it looks at dividend growth earnings cash flows things like that uh it does have a very Cy uh cyclical lean right now so I I think you need to understand that before jumping in but um I'm going to give the wi here to dvo just because I think it does a little more of what I think a dividend ETF should do with the caveat that you need to understand what the fund is this is a covered call fund so you're going to be giving up some upside potential in exchange for that higher yield so uh with that understanding I I'll give dvo the narrow Wi on this one got it Shaina you're up next how do you see see it when it comes to exposure strategy so as the queen of alts of course I'm going to be drawn to the one that does a bught strategy but it's actually not my winner um I have a wild card for my winner but let's kind of walk through and add to some of what Dave pointed out I'm going to start with CG DV um and um to add on to what Dave already talked about I personally hate the way cap group manages their products this approach where they're so large in their assets what they end up doing is you got they have groups of managers they have teams of PMS right and they all work together and what cap group does is they sleeve positions of the portfolios to different teams but none of those teams invest the same way so it makes it really hard to have consistency when you look at the portfolio and know what you're getting because one team could be doing the approach that Dave's talking about which is what's leading to you know having some of those growth year names while the other team could be really actually focused on dividend and you really don't know um and and so for that reason it's just very the cap group funds and I know they're very popular American Funds obviously is massive cap group is massive it's very popular for a lot of reasons which I understand but for me I want somebody who takes ownership of the strategy so I know what I'm getting I know how to understand the return streams I know like what's going to drive returns in certain markets but when you have multiple teams that aren't doing the same thing and you mishmash them together you don't get anything that you can work with to set expectations for returns or what that portfolio is going to look like at any given time so that is for me my biggest issue with CG DV now with fdvv it's important to point out that is actually not managed by Fidelity that is sub-advised by geode um and so it's not even really managed in-house at Fidelity that said I do like that at least in that product there's some structure to the way that they screen and unlike the cap group fund like I know what I'm getting I like I know the the positives I know the negatives and I and I can set somewhat of a return expectation obviously I like dvo because it's a buo strategy I'm G to be attracted to the thing that's doing the like more interesting alternative kind of thing to to to add to to the product it has the highest yield um and it it has a good track record it's very attractive however if I was just picking from the three we had dvo would be my winner but I wanted to think about the audience right so we're doing a high yield dividend battle and I'm thinking well if I'm going to suggest to somebody a strategy that's going to be kind of pure in that sense and I want high yield and dividend payers in my portfolio what would I use and for me um that is DHS which is the Wisdom Tree High dividend income fund IT addresses some of the market cap issues Wisdom Tree exists because they thought market cap weighted indexing um was the wrong way to approach building portfolios so they don't do Market waiting um it is highly Diversified believe it or not most of the funds in this battle are actually really really concentrated which is so weird for me um because there's so much money in so and in the C case of CF group um so many people with their hands in that uh the bowl there um but the thing I like about the Wisdom Tree fund is a it requires that anything that's in it paid a different in in the last 12 months so it's going to hold stuff that paid a dividend because they cannot hold something if it never paid a dividend so it kind of addresses some of the concerns they brought up two it doesn't require that it paid a dividend like for two years or three years it's like in the last 12 months so it actually will have a growth or tilt to it because it can take advantage of newer dividend payers and if a company newly established a dividend payment that's usually a good sign for the direction of the company the stability of the company and the quality of the company it has momentum screens and it has quality screens in their risk metrics that it looks to remove some of the risk in the portfolio um it removes any company that's in the bottom desile of the universe in their composite risk score which is includes quality and momentum factors and it removes any stock that's a top for 5% rank dividend yield that is in the bottom half of that composite risk score so removing some of the Lesser quality names it is kind of heavy in healthcare it does tend to have a couple Tech names but it isn't going to have a tech name in there that doesn't pay a dividend and so I think that's of value now of the of the battle um participants um it has the second highest yield at 2.88% distribution yield um dvo obviously is going to have the highest because it's juicing its yield by doing The Bu rate strategy but if you are somebody watching this battle and you're just like look I just want a dividend Focus Fund in my portfolio that's going to give me above average yield and and you know like Diversified quality exposure to the market um I would recommend DHS which is a Wisdom Tree fund all right that takes us next to Performance and yield and Shaina you're still up so give us your take so if you look at overall the performance of these funds the Fidelity Fund fdvv has the strongest overall performance over all time periods um except for the current time period if I throw in DHS but we'll leave DHS because I don't want to confuse this so for me it's the Fidelity Fund it has um it's done the best um one month it's done the best three Monon year-to dat uh it's a little behind but it crushes the other two and the one year and the three year and the five year so um for me it's the Fidelity Fund um just going to make it clean and easy and base it just on the performance um and that's the fund that wins Dave you're up next how do you see it when it comes to Performance in you yeah same thing uh Fidelity Fund is the winner for me uh for you know on a total return basis I agree I don't need to repeat the numbers um since we're considering yield in here I guess it really depends on what you're looking for if you're if you're looking for a high yield and you're kind of looking purely at yield dvo is probably the one you want uh it's currently paying almost 5% right now but again that's just not a traditional you know dividend Equity type fund you're going to be you know get you're going to be making some tradeoffs in order to get that yield so if you're just kind of a pure income Seeker then Debo works well other than that I'm going to go with the Fidelity Fund too well that takes us next to the mystery battle category where our judges can surprise us with their factor that they feel is uh crucial to today's contest so Dave what is your mystery battle category which of these ETFs wins it yeah my category is going to be Factor tilts and and I want to look at that because of some of the reasons that I mentioned before with CGV kind of uh dipping into non-dividend payers and the Fidelity Fund kind of waiting so it lifts a lot of the mega cap Tech names to the top um the capital group and the Fidelity Fund they both categorize as large gap value according to Morning Star if you dig down into the factors a little bit cgdb does have more of a growth tilt which is consistent with what we've seen in the past does have some higher volatility which is consistent with the composition of the fund we've seen in the past so it does kind of tilt in the direction that we thought it would uh fdvv uh it's a it lags a little bit on yield in that uh in the large value category not a lot though it also has higher uh higher volatility it also has a higher momentum factor which I think uh is probably uh due to the uh meac cap Tech waiting at the top of the portfolio so you kind of again get what you're expecting there uh dvo is in its own category in the derivative income so uh it also skews value uh does have some lower volatility it's it's a little lower on the on the quality till but not much it's it's much closer to I think what you'd expect to see out of maybe more of a traditional uh dividend ETF because I don't think you you necessarily want High Vol High volatility or high risk Within These you kind of want your predictable income Stream So I think dvo is my winner in this category just because it's a little more of a conservative approach uh focuses on the yield uh again you've got some concentration in the Holdings there which uh you know may not be ideal but I don't think it really skews things too much so I'm going to go with dvo is my winner in the factor category Shaina you're up next for your mystery B category what is it and which of these ETFs wins it so I ask the audience what their objectives are when they buy a dividend income fund right is it just pure play yield because if you're just looking for yield there are better ways to incorporate that in your portfolio by focusing on BuyRight funds and things that are generally manage to maximize the yield that they are able to um to generate from the underlying portfolio strategy but that's different than if you're buying high dival in companies because you think that that is a reflection of a higher quality company with more stability and um and that that's what you want in your portfolio right so if I was building a portfolio and I think about and when I worked at Fidelity saai actually did Cover div paying um stocks it was dividend growth more than it was dividend income in general but um I have a little bit of experience here and evaluating these names and um you have to know why you own the name and if we're going to do a dividend battle I'm going to come to it with the assumption that the reason I own it is for the fact that there are qualities with dividend payers that I um find attractive and that I want my portfolio and not necessarily putting it in my portfolio to generate yield right because that's when you do that sometimes you bring in more risk because you know higher dividend yielding stocks could very well be more risky and not be as stable because things like MLPs and REITs can fall into that category um with that said um dvo is my winner if you're thinking about it from yield standpoint however I think there's better ways to do a Buy rate strategy and get distribution and yield than what dvo is doing um and if I am thinking about it from the standpoint that I mentioned I I am going to choose my Wild Card which is DHS which is bringing me the um attributes that I attribute to higher dividend High dividend and dividend paying stocks right and I want the growth more than I want the yield because the growth is a sign of quality in a way that yield is not yield can go up because the stock got hammered right so a dividend yield and just focusing on the income can bring into your portfolio risk rks that maybe you didn't think about so for me I want to focus on a stock a portfolio that is only investing in stocks that pay a dividend and the with a focus on quality and dividend growth because that's going to put the names in my portfolio that bring the most positive um attributes to my for portfolio in terms of quality and um so for that reason I am choosing DHS as the winner of my mystery battle category well we've reached a part of the program where our judges can give us their overall battle winner so how will this go down Shane give it to us so um I don't know that I have to say much more than I just did DHS is my winner of this battle I'm coming at it from the standpoint of why do I own a dividend paying or a dividend focused ETF if it's equities um it's usually not because I'm looking for yield but it's more that I'm looking for the qualities that typically are attributed to divin paying companies and so for me it's DHS um and so that is my winner I won't go and say what I already said over again Dave your final chance to weigh in with your overall winner yeah my thought process is is kind of the same um CG DV is out for me I just can't get behind the idea of a dividend ETF including non-dividend payers I just um if I'm going to invest in a dividend ETF I want dividend paying stocks in there and granted it's a it's a small percentage that's non-dividend payers but um it just potentially gives it a a bit of an opportunistic feel to it and I think we saw that recently when it was kind of heavily tilted towards Tech and you look at the allocation now Tech is only I think the second largest holding and it's less than 20% so um I'm I'm going to cross that one out the Fidelity Fund does does better um I don't like the tech heavy Tilt at the top of the portfolio and especially since you know the the top names in the in the portfolio all have less than 1% yield I think you're you're uh structure and kind of your the way you're constructing the portfolios off if those are the top Holdings in what's supposed to be a high dividend yield fund so by default I'm going to go with dvo as the winner um I don't I don't think it's necessarily a bad choice if you're looking for for dividend yield obviously it's not a traditional dividend Equity ETF so you have to understand that before just jumping at the you know 5% yield uh but I do like the underlying portfolio I think it does uh do a little a better job of focusing on the factors that you need to uh that are helpful when investing in dividend stocks um and you know it has a festor morning star rating too so I think that works in its favor but uh I do like shaya's suggestion of DHS as an alternative uh I do like the Wisdom Tree funds I think they do do a good job so within these three ETFs I'll choose dvo but I I do endorse the DHS Choice as well well our judges have spoken and according to our battle score SC card today's winner is a split decision between DHS which was the Wild Card offered up by Shaina and dvo which was Dave's choice and both of our judges made strong arguments of course uh Shaina uh liking DHS for uh its quality and momentum screens also looking at the dividend payers pay companies that have paid a dividend over the past 12 months and as well as that factor of dividend growth so DHS checked all the boxes for her as far as Dave is concerned he raised some great points about uh dvo of course um using not just a traditional dividend strategy but also adding that layer of covered calls and juicing those yields of course yes but with higher yields and and and covered calls of course you're also capping some of the upside gains potential that you're you're going to have in that portfol folio but uh both of our judges did a great job and I'm really glad we were able to analyze today's dividend triple header we couldn't have done it without you thank you so much for having me Ron I really appreciate it yeah thanks Ron good to see you nice work to both Shaina and Dave be sure to hit the description section below we've got links to both of our program judges we've also got links to our program sponsor Direction so don't be a stranger which ETF battle would you like to see in our next episode hit me up with your ETF ticker symbols in the comment section below uh or on our X feed at etfguide don't forget to hit the Subscribe button join our community and uh that does it for today's episode thanks for watching ETF battles I'm Ronda legi and we'll see you on the next program