Fidelity’s 5 Best Dividend ETFs
By: Jonathan Wolfgram,
Fidelity’s 5 best dividend etfs (exchange-traded funds) should interest all investors.
Professional and institutional investors can afford the time and resources to perform their own analysis in search of Fidelity’s five best dividend ETFs or even the top ones among other providers but part-time investors may prefer a shortcut. This analysis selects Fidelity’s 5 best dividend ETFs right now.
A focus on ETFs might have been suboptimal 30 years ago when they first emerged. Back then, investors had a slim selection of relatively few funds. However, the availability of diverse ETFs has expanded rapidly since then.
Today, even a single provider can have hundreds of available ETFs that offer investors the diversification they need even when limiting their choices to a single provider. In no particular order, the list below includes 5 of the best dividend ETFs from Fidelity Investments in terms of yield and overall performance.
Fidelity’s 5 Best Dividend ETFs #5:
Fidelity Large Growth Equity ETF (NYSE:ONEQ)
This fund seeks to mimic the performance of the Nasdaq Composite Index, investing at least 80% of its assets in securities included in the underlying index. As of September 24, 2021, the fund has $4.6 billion in 1,035 different holdings. Despite the large number of holdings, 44.76% is invested in the top 10 companies. with the top 3 — Apple Inc (NYSE:AAPL), 10.33%; Microsoft Corp (NASDAQ:MSFT), 9.1%; and Amazon.com Inc (NASDAQ:AMZN), 7.11% — occupying nearly a third of the total holdings. United States-based companies occupy 95.44% of the assets, with small contributions from China, Brazil, the United Kingdom and several more countries.
The fund boasts an impressive 30.15% return in the trailing 12 months. It currently trades at $55.17 and has a dividend yield of 0.78%.
Chart provided by Stock Rover.
Fidelity’s 5 Best Dividend ETFs #4:
Fidelity MSCI Utilities Index ETF (NYSE:FUTY)
Using a representative sampling indexing strategy, the fund’s management invests at least 80% of the fund’s assets in securities included in the MSCI USA IMI Utilities Index. As of September 24, 2021, FUTY’s $1.1 billion of net assets were invested in shares of 68 individual corporations, one limited partnership and cash.
The regional asset allocation exposure is exclusively U.S. companies, with 99.35% of these holdings in the utilities sector. Electric utilities account for more than 59% of total assets, with multi-utility companies accounting for an additional 27% share of assets. Independent Power and Renewable Electricity, as well as Gas Utilities and Water Utilities, round out the remaining 12% of asset allocations.
The top 10 holdings account for more than half of total assets, with the top five — NextEra Energy, Inc. (NYSE:NEE), 14.82%; Duke Energy Corporation (NYSE:DUK), 7.24%; Southern Company (NYSE:SO), 6.25%; Dominion Energy, Inc. (NYSE:D), 5.65%; and Exelon Corp (NASDAQ:EXC), 4.31% — contributing nearly a third of total assets.
The fund’s current distribution yield is 2.82%. FUTY has increased its share price by 16% in the trailing 12-month period and trades at $40.92.
Chart provided by Stock Rover.
Fidelity’s 5 Best Dividend ETFs #3:
Fidelity High Yield Factor ETF (NYSE:FDHY)
This fund invests more than 80% of its $277.5 million in below-investment-grade securities, also called high-yield debt securities or junk bonds. Its comparably small sum of assets is diversified between 414 holdings, with the top 10 only making up 14.46% of the total value. Only one holding — Fidelity Reverse Street Trust, 2.71% — has more than 2% of the fund’s assets. Unlike many ETFs on this list, the High Yield Factor ETF is actively managed. Thus, it can mitigate interest rate risk in a quickly changing market, helping it to produce an 8.66% return in the trailing 12 months.
In addition to active management, the fund is one of the first fixed income ETFs to use a factor-based approach in its investment strategy. The fund’s management surveys more than 1,000 high-yield debt securities with a quantitative model and selects the most promising ones from the final result.
FDHY has an impressive annual dividend yield of 6.02%. It currently trades at $46.65.
Chart provided by Stock Rover.
Fidelity’s 5 Best Dividend ETFs #2:
Fidelity High Dividend ETF (NASDAQ:FDVV)
This ETF seeks to provide investment returns that track the performance of the Fidelity Core Dividend Index. Under normal circumstances, the fund invests at least 80% of its assets in securities included in the underlying index. The index targets large- and mid-capitalization dividend-paying companies, which are projected to continue distributing and raising their dividends.
The fund’s nearly $1.2 billion of total assets are spread across 122 equity holdings and less than 1% of assets are in cash. While the top 10 holdings account for nearly 30%, the top five companies — Apple, Inc. (NASDAQ:AAPL), 4.95%; Microsoft Corporation (NASDAQ:MSFT), 4.76%; JPMorgan Chase & Co (NYSE:JPM), 2.45%; Blackstone Inc (NYSE:BX), 2.22%; and Bank of America Corp (NYSE:BAC), 2.21% — combine for only 27% of the fund’s asset total.
The fund’s distribution for 2021 yielded 3.51% and trades at $40.79. While this number is impressive, its dividend yield has the potential to grow further still, due in large part to the fund’s heavy asset allocation in Information Technology (20.89%), Financials (19.33%) and Consumer Staples (12.24%) constituting more than half of the total assets.
Chart provided by Stock Rover.
Fidelity’s 5 Best Dividend ETFs #1:
Fidelity Dividend ETF for Rising Rates (NASDAQ:FDRR)
While many dividend-paying stocks can prove vulnerable with rising interest rates, the Fidelity Dividend Index for Rising Rates is specifically designed to thrive in such a paradigm. The fund normally invests over 80% of its assets in the underlying index — the Fidelity Dividend Index or Rising Rates — and focuses on large and mid-capitalization companies performing with a positive correlation to 10-year U.S. Treasury yields. These holdings are expected to pay and grow their dividends regardless of the Federal Reserve’s borrowing costs.
Of the fund’s 129 individual holdings and $499 million in assets, 28.52% is invested in the top 10. Its top two positions — Apple Inc (NASDAQ:AAPL), 6.69% and Microsoft Corp (NASDAQ:MSFT), 6.44% — together make up over 10% of the fund’s total assets. Regarding its sector exposure, the top 3 — Information Technology (27.94%), Health Care (13.59%) and Consumer Discretionary (11.99%) — make up over half of the fund’s holdings.
The fund’s current annual distribution yield is 6.02% and it trades at $42.00. Although interest rates are low now, the fund has shown 31.68% growth in the last year.
Chart provided by Stock Rover.
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