Tag Archives: investing

After Hours Most Active for Dec 9, 2015 : PFE, BAC, MU, V, KMI, HLT, HPE, CSCO, QQQ, QCOM, YHOO, MSFT

The NASDAQ 100 After Hours Indicator is down 1.52 to 4,620.62. The total After hours volume is currently 37,696,159 shares traded. The following are the most active stocks for the after hours session Pfizer, Inc. ( PFE ) is

The iShares Select Dividend ETF: Not Your Traditional Dividend ETF

Summary Compared with other dividend ETFs DVY is quite unique. Its portfolio is a lot different than some would expect. It is higher yielding than both VYM and SCHD. In my last article I highlighted the PowerShares S&P 500 High Dividend Low Volatility ETF (NYSEARCA: SPHD ) which I believe is a very solid dividend ETF. Of course, I also highlighted that there are also plenty of other good dividend ETFs available to investors. One other dividend fund I personally like is the iShares Select Dividend ETF (NYSEARCA: DVY ). I believe that DVY is unique in the sense that it is a more like a traditional dividend ETF, however, is not your typical one. Having said that, I believe DVY is an excellent compliment to a more traditional dividend ETF. To really highlight DVY, and why I believe it is uniquely good, I thought it would be prudent to compare it to two other high quality dividend ETFs. The two that I chose are the Vanguard High Dividend Yield ETF (NYSEARCA: VYM ) and the Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD ). A couple of basics are laid out in the table below to get a quick glance at each of the funds before getting to their holdings. Fund Yield Expense Ratio Price/Earnings Beta DVY 3.32% 0.39% 17.01 0.52 SCHD 2.94% 0.07% 19.59 ~1.0 VYM 3.02% 0.10% 19.30 0.93 From the higher yield and lower P/E ratio we can see right away that DVY is different than these other two. What might stand out the most for some is DVY’s expense ratio, though. This higher expense ratio compared with the other two is an obvious downside. However, while the expense ratio seems very high compared to these two, it is actually is below the average of 0.44% for ETFs in general. A big plus for DVY would be the low beta. It is definitely a fund that experiences less volatility than some of the other dividend focused ETFs. Taking a quick look at the top 10 holdings it is easy to see how the basics above come together. Looking at the above list it doesn’t really seem like this is by any means your more traditional dividend ETF. AT&T (NYSE: T ) doesn’t even cut into the top 25 holdings. Johnson & Johnson (NYSE: JNJ ) isn’t even in the 100 name portfolio. To really exemplify what I’m getting at, below are the top 10 holdings for the other two funds. SCHD VYM Comparing the top 10 holdings is great and all, but the real comparison comes with looking at the overall holdings based on sector. This is where DVY looks immensely different than other dividend ETFs. Similar to SPHD, DVY is heavily weighted toward utilities. The difference would be that DVY is not weighted with REITs at all. It is fairly obvious why there is such a great weight dedicated to utilities seeing as they are some of the best dividend payers in the market. Having regulated and reoccurring businesses offers for the most part consistent safety for dividends. In comparison take a look at the sector weights for the other two. (SCHD left, VYM right) As can be seen, both have very few utilities in their portfolios. This is what I believe makes DVY such a good compliment to either of these solid funds. Since both SCHD and VYM are lacking in exposure to utilities, one could easily make up with this by adding DVY. DVY is clearly a lot different than traditional dividend focused ETFs in the sense that one is getting such large exposure to utilities. For those seeking income this is a good thing considering utilities are such solid dividend payers. Same as my previous article I will give a fair warning to investors as to where the funds value is. With a rate hike looming on the horizon it may be prudent to wait on the purchase of DVY. Since utilities is one of the larger sectors most affected by a rate hike, it may be prudent to wait and see if there is any further downside post-hike. In conclusion, DVY is very unique dividend ETF. Since it gives a much different exposure to investors I see it as an excellent compliment to those who own other traditional dividend ETFs. Overall, the fund is a solid pick for any dividend investor seeking attractive distributions and relatively low volatility.

Is The Kinder Morgan Plunge An Opportunity To Buy Its ETFs?

While the collapse in oil price has battered the energy sector as a whole, pipeline operators have been the worst hit. This is because the oil rout has prompted the cash-strapped oil producers to cut their spending on projects that pipeline operators were relying on to fund investor payouts. The move has taken a huge toll on Kinder Morgan’s (NYSE: KMI ) balance sheet and dividend payout. Shares of KMI have been in a free-fall territory over the past five days, plunging nearly 30%. From a year-to-date look, Kinder Morgan has lost 60.8% of its value. The problems for Kinder Morgan started last Monday when it unveiled plans to increase its stake to 50% from 20% in a struggling natural gas pipeline company of America. The woes aggravated the next day when Moody’s Investors Service lowered the outlook for the company from stable to negative, raising concerns over the sustainability of a high dividend. Finally, the largest pipeline infrastructure company in the world slashed its dividend by 75% for the first time in its history to conserve cash. The company’s quarterly dividend is now 12.5 cents, a sharp fall from 51 cents. The new policy of reduced dividend will begin from the fourth quarter. The move negates the promise of increasing dividend by 6-10% for the next year that the company made on November 18. Since the majority of KMI’s stockholders are income-oriented, the action led to a huge decline in the share price. KMI’s shares tumbled 6.5% to a record low of $14.70 in after-market hours on Tuesday’s trading session. However, the dividend cut would be beneficial for the company in the long term as it will improve its financial position and help to maintain its investment grade status. Standard & Poor’s appreciated the move by reaffirming its stable outlook on the company. The agency believes that “the move will enable the company to continue to execute on its future growth plans and maintain a total net debt to EBITDA ratio around 5.5x for the next several years.” Additionally, Moody’s reversed its recent downgrade in outlook to stable from negative. As a result, the current slump in the stock could represent a great buying opportunity for long-term investors. This is especially true as the stock currently trades at a P/E ratio of 23, lower than the industry average of 25.6. In addition, the current yield is still impressive at 3.40% even with the massive dividend cut and the share price fall. Investors seeking to tap this opportunity could consider MLP ETFs having largest allocation to this oil and gas pipeline giant. Below we highlight four products in detail: Global X MLP & Energy Infrastructure ETF (NYSEARCA: MLPX ) This product follows the Solactive MLP & Energy Infrastructure Index and holds 39 stocks in its basket. Of these, Kinder Morgan takes the third spot with 7.4% of total assets. In terms of industrial exposure, about 84% of the portfolio is allocated to the oil and gas pipelines and distribution, while oil refining and marketing firms make up for 12% share. The fund has amassed $84.8 million in its asset base and charges 45 bps in annual fees. Volume is good at around 161,000 shares on average. MLPX was down 17.4% over the past five days. First Trust North American Energy Infrastructure ETF (NYSEARCA: EMLP ) This ETF is an actively managed fund designed to provide exposure to the securities headquartered or incorporated in the U.S. and Canada and engaged in the energy infrastructure sector. EMLP is one of the popular funds in this space with AUM of $827.5 million and average daily volume of 410,000 shares. Expense ratio came in at 0.95%. The product holds 66 securities, with Kinder Morgan occupying the second position in the basket at 5.8%. From a sector look, about half of the portfolio is allocated to pipelines while electric power companies round off the top two at 41.1%. The fund lost 9.6% in the past five days. Tortoise North American Pipeline Fund (NYSEARCA: TPYP ) This fund follows the Tortoise North American Pipeline Index, holding 101 securities in its basket. Oil & gas pipelines make up for 72% of assets followed by natural gas utilities at 17%. Here, Kinder Morgan occupies the fifth spot with a 4.9% share. The product recently debuted in the space and has accumulated $17.9 million in its asset base in six months. It trades in lower average daily volume of 13,000 shares while charges 70 bps in fees per year from investors. The ETF was down about 13% in the same period. ALPS Alerian Energy Infrastructure ETF (NYSEARCA: ENFR ) This fund tracks the Alerian Energy Infrastructure Index, holding 36 stocks in its basket. Of these, Kinder Morgan takes the thirteenth place with a 3.9% share. Oil and gas pipeline and the distribution sector dominates the fund’s return at 79%, while utilities, and oil refining and marketing take the remainder. The ETF is unpopular and illiquid having gained $10.5 million in total asset base. The fund trades in a paltry volume of 5,000 shares. It charges 65 bps in fees per year from investors and lost 13.6% in the past five days. Original Post