What a $5 Million Dividend ETF Sale Signals After an 8% One-Year Gain

On January 21, Ergawealth Advisors, Inc. disclosed in a U.S. Securities and Exchange Commission (SEC) filing that it sold 126,710 shares of the First Trust SMID Cap Rising Dividend Achievers ETF (NASDAQ:SDVY) in the fourth quarter, an estimated $4.81 million trade based on quarterly average pricing.

What happened

According to an SEC filing dated January 21, Ergawealth Advisors, Inc. sold 126,710 shares of the First Trust SMID Cap Rising Dividend Achievers ETF (NASDAQ:SDVY) during the fourth quarter. The estimated transaction value is $4.81 million, calculated using the average unadjusted closing price for the quarter. The fund’s SDVY position ended the quarter at $2.36 million, down approximately $4.80 million from the previous filing, a change reflecting both share sales and price movement.

What else to know

The SDVY sale reduced its share of reportable assets from 3.3% to 1.09% of 13F AUM, placing it outside the fund’s top five holdings.

Top holdings after the filing:

• NASDAQ: FTHI: $49.54 million (22.8% of AUM)
• NYSEMKT: CGGR: $31.96 million (14.7% of AUM)
• NYSEMKT: CGDV: $26.30 million (12.1% of AUM)
• NYSEMKT: CGMM: $21.60 million (9.9% of AUM)
• NYSEMKT: CGUS: $15.88 million (7.3% of AUM)

As of January 21, SDVY shares were priced at $40.99, up about 8% over the past year.

ETF overview

ETF snapshot

• SDVY’s investment strategy focuses on small- and mid-cap U.S. equities with a consistent record of rising dividends, aiming to track an index of 100 such companies.
• The portfolio is diversified across 100 holdings, emphasizing companies with strong dividend growth characteristics and the potential for continued increases.
• It’s structured as an exchange-traded fund, offering investors exposure to a rules-based, dividend-growth methodology.

The First Trust SMID Cap Rising Dividend Achievers ETF provides investors access to a diversified basket of small- and mid-cap U.S. companies with a proven history of increasing dividends. The fund's strategy leverages a quantitative index methodology to identify holdings with both historical and prospective dividend growth potential. With a focus on disciplined portfolio construction and dividend sustainability, the ETF offers a solution for investors seeking capital appreciation and income growth within the SMID cap segment.

What this transaction means for investors

Last quarter, Ergawealth trimmed broad dividend exposure while concentrating capital into a higher-income strategy, with FTHI now commanding nearly 23% of reported AUM. That context makes the SDVY exit feel potentially deliberate rather than defensive.

SDVY has done its job. The ETF gained about 8% over the past year, sits near its 52-week high around $41, and manages more than $10 billion in assets, reflecting strong demand for small and mid-cap dividend growers. But relative to the S&P 500, returns have lagged, and the fund’s modest yield profile leaves less room for income-focused allocators to justify outsized exposure.

Ergawealth reduced SDVY from 3.3% to just over 1% of AUM while also trimming FTCS, reinforcing a pattern of paring diversified equity factor funds in favor of more targeted income and growth sleeves. Ultimately, dividend growth strategies remain useful, but position sizing matters when returns compress, and rotations like this tend to reflect opportunity cost more than a loss of conviction, especially when the underlying fund continues to execute exactly as designed.

Jonathan Ponciano 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.