HDV
iShares Core High Dividend ETF
HDV tracks the Morningstar Dividend Yield Focus Index, selecting companies with sustainable competitive advantages and strong financial health. Combines dividend yield with quality metrics. Emphasizes dividend sustainability over pure yield.
SPYD
SPDR S&P 500 High Dividend ETF
SPYD tracks the S&P 500 High Dividend Index, selecting the 80 highest-yielding S&P 500 stocks. Equal-weighted methodology reduces concentration. Pure yield-focused strategy without quality screens. Higher yield but potentially higher risk.
Key Metrics Comparison
| Metric | HDV | SPYD | Winner |
|---|---|---|---|
| Dividend Yield | 3.85% | 4.35% | SPYD (+0.50%) |
| Expense Ratio | 0.08% | 0.07% | SPYD (-0.01%) |
| 5-Year Annual Return | 9.2% | 8.6% | HDV (+0.6%) |
| Number of Holdings | 75 | 80 | SPYD (+5) |
| Assets Under Management | $9.3B | $6.8B | HDV |
| P/E Ratio | 13.5 | 12.8 | SPYD (cheaper) |
| Price/Book Ratio | 2.3 | 2.1 | SPYD (cheaper) |
| Beta vs S&P 500 | 0.78 | 0.82 | HDV (lower risk) |
Performance Comparison
HDV Performance
Lower yield but higher returns through quality focus. Quality screening reduces dividend cut risk. More defensive characteristics. Lower volatility during market stress. Better capital preservation. Outperforms in quality-focused markets.
SPYD Performance
Higher yield but lower returns. Equal-weighted reduces concentration risk. Pure yield strategy includes higher-risk names. More cyclical exposure. Higher income but lower quality. Better in rising rate/value environments.
Strategy Analysis
HDV Approach
Quality-focused high dividend strategy:
- Tracks Morningstar Dividend Yield Focus Index
- Combines dividend yield with quality metrics
- Screens for sustainable competitive advantages
- Requires strong financial health scores
- Market-cap weighted methodology
- Emphasis on dividend sustainability
- Lower yield but higher quality focus
- Defensive sector overweight
SPYD Approach
Simple high yield dividend strategy:
- Tracks S&P 500 High Dividend Index
- Selects 80 highest-yielding S&P 500 stocks
- Equal-weighted methodology (each ~1.25%)
- No quality screens beyond S&P 500 membership
- Pure yield maximization strategy
- Quarterly rebalancing
- Higher yield but potentially higher risk
- Reduced concentration through equal-weight
Quality Screening & Methodology Differences
HDV's quality screens vs SPYD's pure yield approach creates dramatically different portfolio characteristics.
Quality Screening
Average ROE
Dividend Cut Rate (2008)
Debt/Equity Ratio
Index Construction & Weighting Differences
HDV's market-cap weighting vs SPYD's equal-weighting creates different risk exposures and concentration levels.
Weighting Methodology
HDV: Market-cap weighted (up to 5%+)
SPYD: Equal-weighted (all ~1.25%)
Concentration Risk: HDV higher, SPYD lower
Top 10 Holdings %: HDV 45% vs SPYD 13%
Selection Criteria
HDV Universe: US large/mid-cap with quality screens
SPYD Universe: S&P 500 only, yield ranked
Quality Requirements: HDV strict, SPYD none
Yield Threshold: SPYD higher minimum
Rebalancing & Turnover
HDV Rebalancing: Annual
SPYD Rebalancing: Quarterly
Turnover: HDV ~15%, SPYD ~40%
Implementation Cost: SPYD higher due to turnover
Yield Concentration & Sector Differences
SPYD's pure yield approach creates different sector exposures than HDV's quality-focused yield strategy.
Real Estate Exposure
Utilities Exposure
Energy Exposure
Financials Exposure
Risk & Volatility Characteristics
HDV's quality focus provides better downside protection despite SPYD's equal-weight diversification.
Volatility Metrics
Standard Deviation: HDV 14.5% vs SPYD 16.2%
Maximum Drawdown (2020): HDV -30% vs SPYD -38%
Downside Deviation: HDV 10.2% vs SPYD 11.8%
Bear Market Performance: HDV better protection
Dividend Sustainability
Payout Ratio: HDV 48% vs SPYD 62%
Free Cash Flow Yield: HDV 6.8% vs SPYD 5.2%
Dividend Safety Score: HDV 82 vs SPYD 65
Cut Probability: HDV low, SPYD medium
Concentration Risk
Top 5 Holdings %: HDV 28% vs SPYD 6%
Single Sector Max: HDV 28% vs SPYD 25%
Stock-Specific Risk: HDV higher, SPYD lower
Diversification Benefit: SPYD better
Income Analysis
HDV Income Profile
Moderate yield with high sustainability. Quality-focused companies with strong financials. Lower dividend cut risk during recessions. More stable income stream. Lower cyclical exposure. Better inflation protection through quality.
SPYD Income Profile
Higher yield with moderate sustainability. Pure yield strategy includes cyclical names. Higher dividend cut risk during downturns. More variable income stream. Higher real estate and utilities exposure. Better absolute income generation.
Historical Performance & Backtesting
Long-Term Performance Comparison
HDV has outperformed SPYD historically despite lower yield, thanks to quality screening and better downside protection.
Since 2015 (SPYD inception)
Maximum Drawdown (2020)
Sharpe Ratio
Dividend Growth
Top Holdings Comparison
HDV Top Holdings (Quality-Focused)
Note: Market-cap weighted, 75 quality companies, defensive heavy
SPYD Top Holdings (Equal-Weighted Yield)
Note: Equal-weighted, 80 holdings, REIT heavy, yield focused
Investment Recommendation
🛡️ Choose HDV If:
- Dividend sustainability is priority (quality screens)
- Better downside protection matters to you
- You prefer higher quality, established companies
- Lower volatility during bear markets is important
- Financial health and competitive advantages matter
- You're concerned about dividend cuts during recessions
- You want defensive sector exposure
- Higher total returns are more important than yield
💰 Choose SPYD If:
- Maximum current yield is primary goal (4.35% vs 3.85%)
- You prefer equal-weight diversification benefits
- Real estate and utilities exposure appeals to you
- Simple, transparent strategy preferred
- You're comfortable with higher dividend cut risk
- You believe in equal-weight outperformance
- Lower expense ratio matters (0.07% vs 0.08%)
- You want pure yield maximization strategy
💡 Portfolio Construction Strategy
For maximum quality focus: Use HDV as core high-yield position (70-80%) with SPYD satellite (20-30%) for yield boost. For balanced approach: 50% HDV + 50% SPYD provides ~4.10% blended yield with mixed quality. For yield maximization: Use SPYD as core (70-80%) with HDV satellite (20-30%) for quality anchor. Important: SPYD's 0.07% expense ratio vs HDV's 0.08% provides slight cost advantage. HDV's quality screens provide better protection during downturns. SPYD's equal-weighting provides better diversification. During defensive markets/recessions, HDV should outperform. During strong real estate/utilities markets, SPYD may outperform. Consider combining with growth: 40% VTI + 30% HDV + 30% SPYD provides growth with quality/yield balance. For retirement: 40% HDV + 30% SPYD + 20% BND + 10% VXUS maximizes income with some quality control.