S&P 500 High Dividend ETF - SPYD

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S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

Bogleheads -

Interested to know if anyone invests in this fund? The yield is close to 4.85% and contains 80 of the 500 companies from the S&P 500 fund. The ETF is however equal weight and not market cap weight which has resulted is frequent rebalancing and turnover.

Adding this ETF to the S&P 500 would reduce the overall allocation to the tech companies.

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Re: S&P 500 High Dividend ETF - SPYD

Post by TheTimeLord »

abuss368 wrote: Tue Apr 06, 2021 10:29 pm Bogleheads -

Interested to know if anyone invests in this fund? The yield is close to 4.85% and contains 80 of the 500 companies from the S&P 500 fund. The ETF is however equal weight and not market cap weight which has resulted is frequent rebalancing and turnover.

Adding this ETF to the S&P 500 would reduce the overall allocation to the tech companies.

Tony
To reduce Tech allocation I would use RSP (S&P Equal Weight).
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Re: S&P 500 High Dividend ETF - SPYD

Post by 000 »

I also don't think this is a great way to reduce tech allocation if that is the goal. Other ways to do this would be more international, US value stocks, or an ex-tech fund. SPYD fund holds too few stocks for me and I'm not a fan of dividend funds either.
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Re: S&P 500 High Dividend ETF - SPYD

Post by JoMoney »

I'm not a fan of the "equal weighting" and even less a fan of the methodology including REITs, not that I think there's something inherently wrong with REITs but they're structured to be "High Dividend" stocks so if you build a fund that's the 80 highest dividend payers it's going to skew to include all the REITs (and less to other potential industries).
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Re: S&P 500 High Dividend ETF - SPYD

Post by luckyducky99 »

Dividends don't matter economically. Picking investments based on them doesn't serve any non-psychological purpose.

Actually I take back the bit about "don't matter" -- if you're investing in taxable, they're bad.
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Re: S&P 500 High Dividend ETF - SPYD

Post by JoMoney »

Below "Portfolio 1"= Vanguard High Dividend Yield (VYM) , "Portfolio 2" = SPYD
This is what PortfolioVisualizer shows as the income return if you did not reinvest dividends on a $10k initial investment in the 2 ETFs.
While the SPYD does have a higher payout, it looks like VYM's dividend (annual aggregate) was more consistent at being stable or going up over periods where SPYD's dividend fell.
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Re: S&P 500 High Dividend ETF - SPYD

Post by patrick013 »

VYM looks like it's weathering the COVID earnings drop better
than SPYD. I don't see where either one paid a dividend in
Qtr 2. But in a future bull market I think SPYD will perform
very well especially if in a Roth account and reinvested. It's
not that far behind in Total Return in it's short ETF history.
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Re: S&P 500 High Dividend ETF - SPYD

Post by rutrow2015 »

SPYD was one of those vehicles that I had my eye on for a while when the COVID dip arrived in March 2020. As an experiment I was looking to set up my own annuity with high yield funds and SPYD was my main selection. When the price dropped from (IIRC) $40 to $30 I began buying. Because of the luck in timing my yield is materially higher than today's. At this point my 'experiment' is throwing off > 70% of what an immediate annuity would have paid me for the same amount of capital invested - but my DIY annuity continues to grow it's payments and of course I've retained the principal.

I reinvest the divvies from my experiment but my new money goes into SCHD. It's also dividend focused but more on dividend growth than yield. My long term plan is to get to a point that dividends pay for all of my expenditures and I can leave the principal to the estate. SPYD will help.

I'm keeping an eye on IUSG if we ever get another 30% market correction.
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Re: S&P 500 High Dividend ETF - SPYD

Post by anon_investor »

rutrow2015 wrote: Wed Apr 07, 2021 1:50 pm SPYD was one of those vehicles that I had my eye on for a while when the COVID dip arrived in March 2020. As an experiment I was looking to set up my own annuity with high yield funds and SPYD was my main selection. When the price dropped from (IIRC) $40 to $30 I began buying. Because of the luck in timing my yield is materially higher than today's. At this point my 'experiment' is throwing off > 70% of what an immediate annuity would have paid me for the same amount of capital invested - but my DIY annuity continues to grow it's payments and of course I've retained the principal.

I reinvest the divvies from my experiment but my new money goes into SCHD. It's also dividend focused but more on dividend growth than yield. My long term plan is to get to a point that dividends pay for all of my expenditures and I can leave the principal to the estate. SPYD will help.

I'm keeping an eye on IUSG if we ever get another 30% market correction.
What made you choose those funds instead of using a combination of VYM (Vanguard High Dividend Yield ETF) and VIG (Vanguard Dividend Appreciation ETF)?
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Re: S&P 500 High Dividend ETF - SPYD

Post by rutrow2015 »

anon_investor wrote: Wed Apr 07, 2021 1:53 pm What made you choose those funds instead of using a combination of VYM (Vanguard High Dividend Yield ETF) and VIG (Vanguard Dividend Appreciation ETF)?

As for SPYD I was looking for a bigger yield number (combined with low ER). I know the total return argument - I even agree with it - but I was looking to maximize monthly cash flow, not return. It's a psychological thing with me.

I'm also already deep in the Schwab universe so that explains SCHD over other choices.
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Re: S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

rutrow2015 wrote: Wed Apr 07, 2021 2:02 pm
anon_investor wrote: Wed Apr 07, 2021 1:53 pm What made you choose those funds instead of using a combination of VYM (Vanguard High Dividend Yield ETF) and VIG (Vanguard Dividend Appreciation ETF)?

As for SPYD I was looking for a bigger yield number (combined with low ER). I know the total return argument - I even agree with it - but I was looking to maximize monthly cash flow, not return. It's a psychological thing with me.

I'm also already deep in the Schwab universe so that explains SCHD over other choices.
So you invest in international or are you S&P 500 and S&P 500 High Dividend only?

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Re: S&P 500 High Dividend ETF - SPYD

Post by BGeste »

I bought a substantial amount of SPYD last spring (less than $28 per share) when I sold individual dividend stocks to tax loss harvest. I am very pleased with the total returns and dividends since.
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Re: S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

Many good responses on this thread. I have enjoyed learning about this ETF. Would this be a better ETF if it was market weight rather than equal weight? Would have less rebalancing and turnover.

Tony
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Re: S&P 500 High Dividend ETF - SPYD

Post by JoMoney »

abuss368 wrote: Wed Apr 07, 2021 10:25 pm Many good responses on this thread. I have enjoyed learning about this ETF. Would this be a better ETF if it was market weight rather than equal weight? Would have less rebalancing and turnover.

Tony
"Better" in what regard ? Market cap weighting would tilt it to larger stocks, which might give it higher quality and lower volatility.
But it would also probably skew it to a handful of stocks in a big way, the other parts of the methodology it follows is being the 80 highest dividend stocks. 1/80 gives each stock about 1.25% by equal weighting, if it was market weighted but still limited to just the 80 stocks it could be a big skew to just a handful of the larger dividend mega-caps.
I like the idea of market cap weighting, but if one was going that way, I would ditch the other criteria as well and go with something like VYM that covers a wider range of the market.
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Re: S&P 500 High Dividend ETF - SPYD

Post by dmcmahon »

000 wrote: Tue Apr 06, 2021 10:38 pm I also don't think this is a great way to reduce tech allocation if that is the goal. Other ways to do this would be more international, US value stocks, or an ex-tech fund. SPYD fund holds too few stocks for me and I'm not a fan of dividend funds either.
Agreed. I would not hold a high-turnover fund to reduce tech exposure. I'd add sector funds around a core SPY or VTI holding, or add a tilt to small-cap (less tech), value (less tech), or international (less tech). Me, I'm overweight tech, taking the opposite side of that bet.
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Re: S&P 500 High Dividend ETF - SPYD

Post by okrylan »

@OP take a look at $SCHD and $SCHV.

SCHD has a higher dividend vs VYM

SCHD has doubled the returns of VYM


SCHD fell 5% less than VYM During march 2020
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Re: S&P 500 High Dividend ETF - SPYD

Post by CyclingDuo »

abuss368 wrote: Wed Apr 07, 2021 10:25 pm Many good responses on this thread. I have enjoyed learning about this ETF. Would this be a better ETF if it was market weight rather than equal weight? Would have less rebalancing and turnover.

Tony
Location of holding it would be key. Due to the REITS and taxes, it would work well within a Roth IRA and less so held in taxable.

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Re: S&P 500 High Dividend ETF - SPYD

Post by CyclingDuo »

luckyducky99 wrote: Tue Apr 06, 2021 10:43 pm Dividends don't matter economically. Picking investments based on them doesn't serve any non-psychological purpose.

Actually I take back the bit about "don't matter" -- if you're investing in taxable, they're bad.
Same tax rate as LTCGs, so if your other taxable income due to pre-tax deductions allows you to pay $0 on either dividends or LTCG - it's all good.
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Re: S&P 500 High Dividend ETF - SPYD

Post by JoMoney »

CyclingDuo wrote: Thu Apr 08, 2021 9:33 am
luckyducky99 wrote: Tue Apr 06, 2021 10:43 pm Dividends don't matter economically. Picking investments based on them doesn't serve any non-psychological purpose.

Actually I take back the bit about "don't matter" -- if you're investing in taxable, they're bad.
Same tax rate as LTCGs, so if your other taxable income due to pre-tax deductions allows you to pay $0 on either dividends or LTCG - it's all good.
Doesn't make any difference in a tax deferred retirement account either.
If the market is "efficient" at pricing dividend stocks, and there are "psychological" or behavioral benefits, that doesn't sound like a bad thing.
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Re: S&P 500 High Dividend ETF - SPYD

Post by MotoTrojan »

If you are okay equal-weighting at <100 holdings, you'd get far more diversification and expected-return by something like QVAL.

If you are turned of by the higher turnover, there are far more efficient ways to tilt away from tech. Fundamental index like FNDX, large-value like VTV, small-value like VBR, etc...

Higher dividends has outperformed in the past but it has nothing to do with the dividends; dividend paying companies tend to be value oriented (cheaper) and higher quality (more profitable) so just directly buy funds that target that if you so desire.
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Re: S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

CyclingDuo wrote: Thu Apr 08, 2021 9:31 am
abuss368 wrote: Wed Apr 07, 2021 10:25 pm Many good responses on this thread. I have enjoyed learning about this ETF. Would this be a better ETF if it was market weight rather than equal weight? Would have less rebalancing and turnover.

Tony
Location of holding it would be key. Due to the REITS and taxes, it would work well within a Roth IRA and less so held in taxable.

CyclingDuo
Perhaps. However, since the 207 Trump Tax Act, REITs qualify for the 20% QBI deduction and are much more tax friendly.

Tony
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Re: S&P 500 High Dividend ETF - SPYD

Post by 1789 »

abuss368

If you underweight tech you might underperform SP500 given the half returns have been coming from top 10. IMO if you want to move away from market dividend investing is not a good place to be.
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Re: S&P 500 High Dividend ETF - SPYD

Post by patrick013 »

Image


The reason these 50-100 stock dividend indexes are like they are is they incur
higher total returns by being equal or yield weighted. Every stock contributes
equally and the dividends reinvested add to that as well.

A stable business cycle is very helpful.
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Re: S&P 500 High Dividend ETF - SPYD

Post by CyclingDuo »

JoMoney wrote: Thu Apr 08, 2021 10:37 am
CyclingDuo wrote: Thu Apr 08, 2021 9:33 am
luckyducky99 wrote: Tue Apr 06, 2021 10:43 pm Dividends don't matter economically. Picking investments based on them doesn't serve any non-psychological purpose.

Actually I take back the bit about "don't matter" -- if you're investing in taxable, they're bad.
Same tax rate as LTCGs, so if your other taxable income due to pre-tax deductions allows you to pay $0 on either dividends or LTCG - it's all good.
Doesn't make any difference in a tax deferred retirement account either.
If the market is "efficient" at pricing dividend stocks, and there are "psychological" or behavioral benefits, that doesn't sound like a bad thing.
JoMoney - yes, that is really an important point.

Rick Ferri had a nice post that I read the other day on the sharing of investment ideas (was an older thread I believe that mentioned Paul Merriman as well as Larry Swedroe) that touched on the premise that although one's philosophy of investing may be different than others, the importance of having a plan and sticking with it is key. If an investor stays the course because of his/her choices, then so be it. That might be dividends for one investor. That might be tilting for another. That might be only total market index funds for others. That might be a mix of all that for yet another. We tend to go round and round on these forums with the sharing of ideas and sometimes the shooting down of investing ideas that might differ from our own, but the behavioral benefits of sticking with a strategy certainly can be to the advantage of the investor over the long haul.

I love Rick's Bogleheads On Investing Podcast which always includes a nice mix of guests with different ideas, strategies, philosophies, etc... .

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Re: S&P 500 High Dividend ETF - SPYD

Post by CyclingDuo »

abuss368 wrote: Thu Apr 08, 2021 12:23 pm
CyclingDuo wrote: Thu Apr 08, 2021 9:31 am
abuss368 wrote: Wed Apr 07, 2021 10:25 pm Many good responses on this thread. I have enjoyed learning about this ETF. Would this be a better ETF if it was market weight rather than equal weight? Would have less rebalancing and turnover.

Tony
Location of holding it would be key. Due to the REITS and taxes, it would work well within a Roth IRA and less so held in taxable.

CyclingDuo
Perhaps. However, since the 207 Trump Tax Act, REITs qualify for the 20% QBI deduction and are much more tax friendly.

Tony
True that, Tony. However, REITs are still mostly non-qualified dividends so the types of investments that pay those are served well in Roth IRA's over taxable given the option. Otherwise you are taxed - even with the 20% QBI deduction - as ordinary income at the marginal rate if held in a taxable account.

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Re: S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

1789 wrote: Thu Apr 08, 2021 12:36 pm abuss368

If you underweight tech you might underperform SP500 given the half returns have been coming from top 10. IMO if you want to move away from market dividend investing is not a good place to be.
That is a reasonable theory. Technology is approximately 25% of the S&P 500 if I read correctly.

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Re: S&P 500 High Dividend ETF - SPYD

Post by TN_Boy »

CyclingDuo wrote: Thu Apr 08, 2021 9:33 am
luckyducky99 wrote: Tue Apr 06, 2021 10:43 pm Dividends don't matter economically. Picking investments based on them doesn't serve any non-psychological purpose.

Actually I take back the bit about "don't matter" -- if you're investing in taxable, they're bad.
Same tax rate as LTCGs, so if your other taxable income due to pre-tax deductions allows you to pay $0 on either dividends or LTCG - it's all good.
The taxation impact of dividends versus LTCG is very specific to your tax bracket *and* how your holdings have been managed.

I've been paying taxes on dividends from a brokerage account for many years. Zero way to avoid based on tax bracket.

But I haven't paid a cent in taxes on LTCG's since 08, due to tax loss harvesting. And yes, I have sold some of those stocks.
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Re: S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

dmcmahon wrote: Thu Apr 08, 2021 12:06 am
000 wrote: Tue Apr 06, 2021 10:38 pm I also don't think this is a great way to reduce tech allocation if that is the goal. Other ways to do this would be more international, US value stocks, or an ex-tech fund. SPYD fund holds too few stocks for me and I'm not a fan of dividend funds either.
Agreed. I would not hold a high-turnover fund to reduce tech exposure. I'd add sector funds around a core SPY or VTI holding, or add a tilt to small-cap (less tech), value (less tech), or international (less tech). Me, I'm overweight tech, taking the opposite side of that bet.
I recall you sold out of Total International Stock correct? You added a technology fund?

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Re: S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

anon_investor wrote: Wed Apr 07, 2021 1:53 pm
rutrow2015 wrote: Wed Apr 07, 2021 1:50 pm SPYD was one of those vehicles that I had my eye on for a while when the COVID dip arrived in March 2020. As an experiment I was looking to set up my own annuity with high yield funds and SPYD was my main selection. When the price dropped from (IIRC) $40 to $30 I began buying. Because of the luck in timing my yield is materially higher than today's. At this point my 'experiment' is throwing off > 70% of what an immediate annuity would have paid me for the same amount of capital invested - but my DIY annuity continues to grow it's payments and of course I've retained the principal.

I reinvest the divvies from my experiment but my new money goes into SCHD. It's also dividend focused but more on dividend growth than yield. My long term plan is to get to a point that dividends pay for all of my expenditures and I can leave the principal to the estate. SPYD will help.

I'm keeping an eye on IUSG if we ever get another 30% market correction.
What made you choose those funds instead of using a combination of VYM (Vanguard High Dividend Yield ETF) and VIG (Vanguard Dividend Appreciation ETF)?
Good question. If I recall you only invest in Total Stock or S&P 500 correct?

Tony
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Re: S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

okrylan wrote: Thu Apr 08, 2021 12:24 am @OP take a look at $SCHD and $SCHV.

SCHD has a higher dividend vs VYM

SCHD has doubled the returns of VYM


SCHD fell 5% less than VYM During march 2020
SCHD dividend yield - 2.87

VYM dividend yield - 2.98

Tony
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Re: S&P 500 High Dividend ETF - SPYD

Post by JoMoney »

abuss368 wrote: Sun Apr 11, 2021 9:24 pm
okrylan wrote: Thu Apr 08, 2021 12:24 am @OP take a look at $SCHD and $SCHV.

SCHD has a higher dividend vs VYM

SCHD has doubled the returns of VYM


SCHD fell 5% less than VYM During march 2020
SCHD dividend yield - 2.87

VYM dividend yield - 2.98

Tony
FWIW, As of the 02/28/2021 price, Morningstar's projected forward Dividend Yield for
SCHD: 3.41%
VYM: 3.36%

Also interesting to note their relative sector makeup, SCHD has 0% allocated to Utilities, and only 1.74% allocated to the energy sector, but a heavier weighting in 'Consumer Cyclicals' (8.75% in SCHD vs 2.96% in VYM)
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Re: S&P 500 High Dividend ETF - SPYD

Post by anon_investor »

abuss368 wrote: Sun Apr 11, 2021 9:22 pm
anon_investor wrote: Wed Apr 07, 2021 1:53 pm
rutrow2015 wrote: Wed Apr 07, 2021 1:50 pm SPYD was one of those vehicles that I had my eye on for a while when the COVID dip arrived in March 2020. As an experiment I was looking to set up my own annuity with high yield funds and SPYD was my main selection. When the price dropped from (IIRC) $40 to $30 I began buying. Because of the luck in timing my yield is materially higher than today's. At this point my 'experiment' is throwing off > 70% of what an immediate annuity would have paid me for the same amount of capital invested - but my DIY annuity continues to grow it's payments and of course I've retained the principal.

I reinvest the divvies from my experiment but my new money goes into SCHD. It's also dividend focused but more on dividend growth than yield. My long term plan is to get to a point that dividends pay for all of my expenditures and I can leave the principal to the estate. SPYD will help.

I'm keeping an eye on IUSG if we ever get another 30% market correction.
What made you choose those funds instead of using a combination of VYM (Vanguard High Dividend Yield ETF) and VIG (Vanguard Dividend Appreciation ETF)?
Good question. If I recall you only invest in Total Stock or S&P 500 correct?

Tony
A majority of my equities are in total stock market or an approximation (S&P500 + extended marekt in my 401k, since there is no total stock market option). Although I have some Vanguard Dividend Appreciation Index in my taxable.
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Re: S&P 500 High Dividend ETF - SPYD

Post by dru808 »

okrylan wrote: Thu Apr 08, 2021 12:24 am

SCHD has doubled the returns of VYM


Really, when? I’m no fan of either but that sounds ludicrous over anything longer than a couple months.
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Re: S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

JoMoney wrote: Sun Apr 11, 2021 9:43 pm
abuss368 wrote: Sun Apr 11, 2021 9:24 pm
okrylan wrote: Thu Apr 08, 2021 12:24 am @OP take a look at $SCHD and $SCHV.

SCHD has a higher dividend vs VYM

SCHD has doubled the returns of VYM


SCHD fell 5% less than VYM During march 2020
SCHD dividend yield - 2.87

VYM dividend yield - 2.98

Tony
FWIW, As of the 02/28/2021 price, Morningstar's projected forward Dividend Yield for
SCHD: 3.41%
VYM: 3.36%

Also interesting to note their relative sector makeup, SCHD has 0% allocated to Utilities, and only 1.74% allocated to the energy sector, but a heavier weighting in 'Consumer Cyclicals' (8.75% in SCHD vs 2.96% in VYM)
That is interesting. Thanks for sharing.

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Re: S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

anon_investor wrote: Sun Apr 11, 2021 9:51 pm
abuss368 wrote: Sun Apr 11, 2021 9:22 pm
anon_investor wrote: Wed Apr 07, 2021 1:53 pm
rutrow2015 wrote: Wed Apr 07, 2021 1:50 pm SPYD was one of those vehicles that I had my eye on for a while when the COVID dip arrived in March 2020. As an experiment I was looking to set up my own annuity with high yield funds and SPYD was my main selection. When the price dropped from (IIRC) $40 to $30 I began buying. Because of the luck in timing my yield is materially higher than today's. At this point my 'experiment' is throwing off > 70% of what an immediate annuity would have paid me for the same amount of capital invested - but my DIY annuity continues to grow it's payments and of course I've retained the principal.

I reinvest the divvies from my experiment but my new money goes into SCHD. It's also dividend focused but more on dividend growth than yield. My long term plan is to get to a point that dividends pay for all of my expenditures and I can leave the principal to the estate. SPYD will help.

I'm keeping an eye on IUSG if we ever get another 30% market correction.
What made you choose those funds instead of using a combination of VYM (Vanguard High Dividend Yield ETF) and VIG (Vanguard Dividend Appreciation ETF)?
Good question. If I recall you only invest in Total Stock or S&P 500 correct?

Tony
A majority of my equities are in total stock market or an approximation (S&P500 + extended marekt in my 401k, since there is no total stock market option). Although I have some Vanguard Dividend Appreciation Index in my taxable.
That is a nice portfolio - Total Stock and Dividend Appreciation.

Tony
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Re: S&P 500 High Dividend ETF - SPYD

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abuss368 wrote: Sun Apr 11, 2021 10:11 pm
anon_investor wrote: Sun Apr 11, 2021 9:51 pm
abuss368 wrote: Sun Apr 11, 2021 9:22 pm
anon_investor wrote: Wed Apr 07, 2021 1:53 pm
rutrow2015 wrote: Wed Apr 07, 2021 1:50 pm SPYD was one of those vehicles that I had my eye on for a while when the COVID dip arrived in March 2020. As an experiment I was looking to set up my own annuity with high yield funds and SPYD was my main selection. When the price dropped from (IIRC) $40 to $30 I began buying. Because of the luck in timing my yield is materially higher than today's. At this point my 'experiment' is throwing off > 70% of what an immediate annuity would have paid me for the same amount of capital invested - but my DIY annuity continues to grow it's payments and of course I've retained the principal.

I reinvest the divvies from my experiment but my new money goes into SCHD. It's also dividend focused but more on dividend growth than yield. My long term plan is to get to a point that dividends pay for all of my expenditures and I can leave the principal to the estate. SPYD will help.

I'm keeping an eye on IUSG if we ever get another 30% market correction.
What made you choose those funds instead of using a combination of VYM (Vanguard High Dividend Yield ETF) and VIG (Vanguard Dividend Appreciation ETF)?
Good question. If I recall you only invest in Total Stock or S&P 500 correct?

Tony
A majority of my equities are in total stock market or an approximation (S&P500 + extended marekt in my 401k, since there is no total stock market option). Although I have some Vanguard Dividend Appreciation Index in my taxable.
That is a nice portfolio - Total Stock and Dividend Appreciation.

Tony
I also have some VGT (Info Tech index) and VUG (Growth index) that have significant unrealized gains, but I am only buying total stock market with new money. I treat my Dividend Appreciation holding as a second tier of my emergency fund. I have been working to simplify my portfolio over the last few years. At this point I got rid of all the tax inefficient holdings and individual stocks in my taxable, so I am just leaving everything else with large unrealized gains alone. Trying not let perfect be the enemy of good.
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Re: S&P 500 High Dividend ETF - SPYD

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abuss368 wrote: Sun Apr 11, 2021 9:18 pm
dmcmahon wrote: Thu Apr 08, 2021 12:06 am
000 wrote: Tue Apr 06, 2021 10:38 pm I also don't think this is a great way to reduce tech allocation if that is the goal. Other ways to do this would be more international, US value stocks, or an ex-tech fund. SPYD fund holds too few stocks for me and I'm not a fan of dividend funds either.
Agreed. I would not hold a high-turnover fund to reduce tech exposure. I'd add sector funds around a core SPY or VTI holding, or add a tilt to small-cap (less tech), value (less tech), or international (less tech). Me, I'm overweight tech, taking the opposite side of that bet.
I recall you sold out of Total International Stock correct? You added a technology fund?

Tony
I still own some international in some trust funds I manage. I don't feel I have the flexibility to change investment policy drastically for those since I have a fiduciary duty to other beneficiaries, so I tend to stick closer to "conventional wisdom". What I've done is allowed the AA to drift down - in other words, I no longer am selling US and adding international in those vehicles, but I am not actively trimming the international positions there either.

I also have some international in my Roth IRA. There, I've drifted into a barbell approach where I've paired international (which I view as a better "value trade" than the USA) with VGT (the "growth trade"). The international AA is coming at the expense of bonds. I've stated in other threads that I've come to view international as a low-growth bond proxy, and I've also stated that I'm well aware that equities are not bonds. But in the current environment with ridiculously low yields on bonds and rising inflation, I've had to do something. The only bonds I'm happy owning now are TIPS, all of them purchased a decade ago. I don't want to buy more now at outright negative yields. So as my beloved TIPS ladder unwinds, I've had to redeploy the funds - but where? All of these were in my Roth 401k and IRA. As the ladder runs off, I've put the funds into the aforementioned barbell. My remaining TIPS will continue to run for up to 10 more years, so I'm not particularly worried about the higher risk of the barbell.

About 10 years ago, when I first invested in VXUS, I had targeted an AA of 40% US stocks, 20% international stocks, and 40% bonds. You can see that this means 1/3 of the stock portion is international. As the years rolled on, I found myself constantly having to add to international (even if it meant selling US) to prop up the position, and I tired of that game. I started letting the AA drift down, and it eventually dropped to 50% US / 10% international / 40% bonds. I threw in the towel at that point and sold out of the remaining international in my personal taxable accounts. So those are now entirely VOO and a ladder of treasuries that pay me bupkiss but let me sleep at night.

But now, with bonds running off and me not wanting to add at these levels, I would say I'm at 60% US, 10% international, 30% bonds. So, yes, I've added to international, but in lieu of bonds. VEA pays 2.5% - way better than I can get in bonds and with some hope of keeping pace with inflation.
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Re: S&P 500 High Dividend ETF - SPYD

Post by dmcmahon »

abuss368 wrote: Sun Apr 11, 2021 9:18 pm
dmcmahon wrote: Thu Apr 08, 2021 12:06 am
000 wrote: Tue Apr 06, 2021 10:38 pm I also don't think this is a great way to reduce tech allocation if that is the goal. Other ways to do this would be more international, US value stocks, or an ex-tech fund. SPYD fund holds too few stocks for me and I'm not a fan of dividend funds either.
Agreed. I would not hold a high-turnover fund to reduce tech exposure. I'd add sector funds around a core SPY or VTI holding, or add a tilt to small-cap (less tech), value (less tech), or international (less tech). Me, I'm overweight tech, taking the opposite side of that bet.
I recall you sold out of Total International Stock correct? You added a technology fund?

Tony
I still own some international in some trust funds I manage. I don't feel I have the flexibility to change investment policy drastically for those since I have a fiduciary duty to other beneficiaries, so I tend to stick closer to "conventional wisdom". What I've done is allowed the AA to drift down - in other words, I no longer am selling US and adding international in those vehicles, but I am not actively trimming the international positions there either.

I also have some international in my Roth IRA. There, I've drifted into a barbell approach where I've paired international (which I view as a better "value trade" than the USA) with VGT (the "growth trade"). The international AA is coming at the expense of bonds. I've stated in other threads that I've come to view international as a low-growth bond proxy, and I've also stated that I'm well aware that equities are not bonds. But in the current environment with ridiculously low yields on bonds and rising inflation, I've had to do something. The only bonds I'm happy owning now are TIPS, all of them purchased a decade ago. I don't want to buy more now at outright negative yields. So as my beloved TIPS ladder unwinds, I've had to redeploy the funds - but where? All of these were in my Roth 401k and IRA. As the ladder runs off, I've put the funds into the aforementioned barbell. My remaining TIPS will continue to run for up to 10 more years, so I'm not particularly worried about the higher risk of the barbell.

About 10 years ago, when I first invested in VXUS, I had targeted an AA of 40% US stocks, 20% international stocks, and 40% bonds. You can see that this means 1/3 of the stock portion is international. As the years rolled on, I found myself constantly having to add to international (even if it meant selling US) to prop up the position, and I tired of that game. I started letting the AA drift down, and it eventually dropped to 50% US / 10% international / 40% bonds. I threw in the towel at that point and sold out of the remaining international in my personal taxable accounts. So those are now entirely VOO and a ladder of treasuries that pay me bupkiss but let me sleep at night.

But now, with bonds running off and me not wanting to add at these levels, I would say I'm at 60% US, 10% international, 30% bonds. So, yes, I've added to international, but in lieu of bonds. VEA pays 2.5% - way better than I can get in bonds and with some hope of keeping pace with inflation.
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Re: S&P 500 High Dividend ETF - SPYD

Post by anon_investor »

dmcmahon wrote: Mon Apr 12, 2021 11:55 am
abuss368 wrote: Sun Apr 11, 2021 9:18 pm
dmcmahon wrote: Thu Apr 08, 2021 12:06 am
000 wrote: Tue Apr 06, 2021 10:38 pm I also don't think this is a great way to reduce tech allocation if that is the goal. Other ways to do this would be more international, US value stocks, or an ex-tech fund. SPYD fund holds too few stocks for me and I'm not a fan of dividend funds either.
Agreed. I would not hold a high-turnover fund to reduce tech exposure. I'd add sector funds around a core SPY or VTI holding, or add a tilt to small-cap (less tech), value (less tech), or international (less tech). Me, I'm overweight tech, taking the opposite side of that bet.
I recall you sold out of Total International Stock correct? You added a technology fund?

Tony
I still own some international in some trust funds I manage. I don't feel I have the flexibility to change investment policy drastically for those since I have a fiduciary duty to other beneficiaries, so I tend to stick closer to "conventional wisdom". What I've done is allowed the AA to drift down - in other words, I no longer am selling US and adding international in those vehicles, but I am not actively trimming the international positions there either.

I also have some international in my Roth IRA. There, I've drifted into a barbell approach where I've paired international (which I view as a better "value trade" than the USA) with VGT (the "growth trade"). The international AA is coming at the expense of bonds. I've stated in other threads that I've come to view international as a low-growth bond proxy, and I've also stated that I'm well aware that equities are not bonds. But in the current environment with ridiculously low yields on bonds and rising inflation, I've had to do something. The only bonds I'm happy owning now are TIPS, all of them purchased a decade ago. I don't want to buy more now at outright negative yields. So as my beloved TIPS ladder unwinds, I've had to redeploy the funds - but where? All of these were in my Roth 401k and IRA. As the ladder runs off, I've put the funds into the aforementioned barbell. My remaining TIPS will continue to run for up to 10 more years, so I'm not particularly worried about the higher risk of the barbell.

About 10 years ago, when I first invested in VXUS, I had targeted an AA of 40% US stocks, 20% international stocks, and 40% bonds. You can see that this means 1/3 of the stock portion is international. As the years rolled on, I found myself constantly having to add to international (even if it meant selling US) to prop up the position, and I tired of that game. I started letting the AA drift down, and it eventually dropped to 50% US / 10% international / 40% bonds. I threw in the towel at that point and sold out of the remaining international in my personal taxable accounts. So those are now entirely VOO and a ladder of treasuries that pay me bupkiss but let me sleep at night.

But now, with bonds running off and me not wanting to add at these levels, I would say I'm at 60% US, 10% international, 30% bonds. So, yes, I've added to international, but in lieu of bonds. VEA pays 2.5% - way better than I can get in bonds and with some hope of keeping pace with inflation.
In your Roth IRA are you holding VGT and international at a 50:50 ratio?
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Re: S&P 500 High Dividend ETF - SPYD

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anon_investor wrote: Mon Apr 12, 2021 12:05 pm In your Roth IRA are you holding VGT and international at a 50:50 ratio?
Not quite. It's still half TIPS. So it's 50/25/25 TIPS/VEA/VGT. Over the next decade if nothing changes this will run off to 0/50/50, but I'm hoping the bond markets regain some sanity and positive real yields will again be seen on TIPS before that happens.

Just to clarify, I use ETFs and never reinvest dividends. I also avoid bond funds and directly own bonds on ladders collecting the interest payments. Because of this, there is always some level of cash flow in the portfolio, in addition to anything I can save out of my paycheck (not much, because I have to pay taxes on the investment income and pay that out of the work income rather than draw down the portfolio.

This means my normal "rebalancing" is more a matter of deciding what to buy, rather than what to sell/exchange. I took a decision last year to allow the bond AA to run down a bit.

Also, I took a decision last year to liquidate my stock holdings and repurchase them in order to harvest the capital gains. I paid the taxes out of the bond run-off. So given that I was selling everything anyway, it was a simpler decision to not repurchase VEA in the taxable accounts. I liquidated VTI and VEA and repurchased VOO with the proceeds. So far no regrets.

My gain-harvesting strategy was based on thinking that I'm unlikely to enjoy lower capital gains tax rates in the future, and it also has the effect of reducing the size of my taxable estate by the amount of the tax paid. It raised a few eyebrows from some of my financial advisors. I have a different (more complex) strategy for avoiding gain taxes in future years that I'm still exploring.
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Re: S&P 500 High Dividend ETF - SPYD

Post by anon_investor »

dmcmahon wrote: Mon Apr 12, 2021 1:23 pm
anon_investor wrote: Mon Apr 12, 2021 12:05 pm In your Roth IRA are you holding VGT and international at a 50:50 ratio?
Not quite. It's still half TIPS. So it's 50/25/25 TIPS/VEA/VGT. Over the next decade if nothing changes this will run off to 0/50/50, but I'm hoping the bond markets regain some sanity and positive real yields will again be seen on TIPS before that happens.

Just to clarify, I use ETFs and never reinvest dividends. I also avoid bond funds and directly own bonds on ladders collecting the interest payments. Because of this, there is always some level of cash flow in the portfolio, in addition to anything I can save out of my paycheck (not much, because I have to pay taxes on the investment income and pay that out of the work income rather than draw down the portfolio.

This means my normal "rebalancing" is more a matter of deciding what to buy, rather than what to sell/exchange. I took a decision last year to allow the bond AA to run down a bit.

Also, I took a decision last year to liquidate my stock holdings and repurchase them in order to harvest the capital gains. I paid the taxes out of the bond run-off. So given that I was selling everything anyway, it was a simpler decision to not repurchase VEA in the taxable accounts. I liquidated VTI and VEA and repurchased VOO with the proceeds. So far no regrets.

My gain-harvesting strategy was based on thinking that I'm unlikely to enjoy lower capital gains tax rates in the future, and it also has the effect of reducing the size of my taxable estate by the amount of the tax paid. It raised a few eyebrows from some of my financial advisors. I have a different (more complex) strategy for avoiding gain taxes in future years that I'm still exploring.
Interesting. I have no international, but I have VGT in my Roth IRA (most of it was bought in fall 2019) and VGT in my taxable (most of it was bought in March 2020). Interesting you are using international as a bond proxy.
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Re: S&P 500 High Dividend ETF - SPYD

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anon_investor wrote: Mon Apr 12, 2021 2:07 pm Interesting. I have no international, but I have VGT in my Roth IRA (most of it was bought in fall 2019) and VGT in my taxable (most of it was bought in March 2020). Interesting you are using international as a bond proxy.
Your strategy makes more sense in a higher-tax world, I may go in that direction (towards VGT in taxable). My experience with international hasn't been good. I bought VXUS 10 years ago, replacing a potpourri of developed-market and EM funds. In late 2019, I decided I'd had enough of the underwhelming performance. It did not seem as if I'd been compensated in any way for the extra risk and tax headaches of owning any EM, so I switched to VEA. At the time, it sported a yield of 3%, better than I could possibly get on bonds, and, allowing for the bumpy ride, it had gone nowhere in 10 years - just like bonds! The tax cost was minimal - if you look at a chart and imagine a series of buys along the way, you'll understand why at the end I had almost no net gain on the VXUS position. I did this just a few months before a massive market crash - ouch! So it was an easy decision to dump it for the tax losses against the gains I was harvesting in VTI.
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Re: S&P 500 High Dividend ETF - SPYD

Post by abuss368 »

dmcmahon wrote: Mon Apr 12, 2021 3:58 pm
anon_investor wrote: Mon Apr 12, 2021 2:07 pm Interesting. I have no international, but I have VGT in my Roth IRA (most of it was bought in fall 2019) and VGT in my taxable (most of it was bought in March 2020). Interesting you are using international as a bond proxy.
Your strategy makes more sense in a higher-tax world, I may go in that direction (towards VGT in taxable). My experience with international hasn't been good. I bought VXUS 10 years ago, replacing a potpourri of developed-market and EM funds. In late 2019, I decided I'd had enough of the underwhelming performance. It did not seem as if I'd been compensated in any way for the extra risk and tax headaches of owning any EM, so I switched to VEA. At the time, it sported a yield of 3%, better than I could possibly get on bonds, and, allowing for the bumpy ride, it had gone nowhere in 10 years - just like bonds! The tax cost was minimal - if you look at a chart and imagine a series of buys along the way, you'll understand why at the end I had almost no net gain on the position. I did this just a few months before a massive market crash - ouch! So it was an easy decision to dump it for the tax losses against the gains I was harvesting in VTI.
Same here. I have been surly somewhat at how many Bogleheads I have corresponded with who invest in a technology fund.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: S&P 500 High Dividend ETF - SPYD

Post by dmcmahon »

abuss368 wrote: Mon Apr 12, 2021 6:57 pm
dmcmahon wrote: Mon Apr 12, 2021 3:58 pm
anon_investor wrote: Mon Apr 12, 2021 2:07 pm Interesting. I have no international, but I have VGT in my Roth IRA (most of it was bought in fall 2019) and VGT in my taxable (most of it was bought in March 2020). Interesting you are using international as a bond proxy.
Your strategy makes more sense in a higher-tax world, I may go in that direction (towards VGT in taxable). My experience with international hasn't been good. I bought VXUS 10 years ago, replacing a potpourri of developed-market and EM funds. In late 2019, I decided I'd had enough of the underwhelming performance. It did not seem as if I'd been compensated in any way for the extra risk and tax headaches of owning any EM, so I switched to VEA. At the time, it sported a yield of 3%, better than I could possibly get on bonds, and, allowing for the bumpy ride, it had gone nowhere in 10 years - just like bonds! The tax cost was minimal - if you look at a chart and imagine a series of buys along the way, you'll understand why at the end I had almost no net gain on the position. I did this just a few months before a massive market crash - ouch! So it was an easy decision to dump it for the tax losses against the gains I was harvesting in VTI.
Same here. I have been surly somewhat at how many Bogleheads I have corresponded with who invest in a technology fund.

Tony
Under some scenarios we’re not allowed to discuss here, a swing-for-the-fences strategy might start to make sense. Imagine a world where there isn’t any tax benefit to long holding periods for investments, while at the same time there is high inflation eating away at long term holds, such that the old get rich slow strategy no longer works beyond a certain point because the taxflation drag is just too high to overcome. In that world it’s go big or go home, you are looking for the big score every year. Another consideration, the relative value of low-yielding growth stocks could rise under foreseeable tax law changes. It’s a hedge. As far as I can go publicly, PM if you want to discuss it further.
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