Here's How Many Shares of the SPDR S&P Dividend ETF (SDY) You'd Need for $500 in Yearly Dividends
Key Points
The SPDR S&P 500 Dividend ETF (SDY) has averaged a 2.56% dividend yield over the past 12 months.
A company must have 20 consecutive years of dividend increases to be included in SDY.
Industrials is the most-represented sector in SDY.
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Investing in a dividend ETF is a great way to double up on benefits: You get instant diversification and consistent income without the risks of investing in an individual stock. One go-to option for many investors is the SPDR S&P 500 Dividend ETF (NYSEMKT: SDY).
Over the past 12 months, SDY has averaged a dividend yield of 2.56%. If that were to hold, you would need to buy about 144 shares at its current price of $136 (as of Nov. 19) to receive $500 in annual dividends.
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SDY is a dividend ETF worth considering because of the criteria required to be included. A company must have raised its annual dividend for 20 consecutive years and have healthy financials. This avoids investing in stocks solely based on their yields, which can put investors at risk of yield traps or unsustainable dividend payouts.
SDY currently contains 149 stocks, spanning all 11 major U.S. economic sectors. The top five represented sectors are industrials (18.90%), consumer staples (17.74%), utilities (15.00%), financials (10.77%), and materials (8.33%), which checks out because those sectors tend to have companies with steady cash flow and are more shareholder-friendly with their dividend policies.
SDY's dividend payout will fluctuate because its holdings pay out dividends at different times, but you can likely expect the ETF to maintain a yield above the S&P 500 average.
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Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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