FDV: Moderate Earnings Growth Key To This Active Dividend ETF's Success (Rating Upgrade)

The Sunday Investor7.15K FollowersFollow5ShareSavePlay(13min)CommentsSummaryFDV is an actively managed large-cap dividend ETF comprised of about 50 U.S. securities. Its net expense ratio is 0.50% and the fund has $612M in assets under management.Underpinning the strategy is the belief that high-dividend stocks will outperform the market with less volatility over the long run. Managers cite research over the last 50 years as support.While FDV has struggled to keep up with similar-yielding peers since its November 2022 launch, a material improvement in its portfolio-level earnings growth rate is a reason to be optimistic.This better factor balance negatively impacts its dividend yield, which I estimate to be 2.98% at current prices. However, it's the right decision, and I expect stronger relative results moving forward.As a result, I've upgraded FDV from a "sell" to a "hold," with a performance and fundamental analysis comparing it with SCHD, VYM, FDVV, DIVB, and DGRO to follow. mustafaU/iStock via Getty Images Investment Thesis I last reviewed the Federated Hermes U.S. Strategic Dividend ETF (FDV) on July 7, 2024, when I rated it a "sell" due to management's preference for low-growth, high-dividend stocks, a strategy with which I disagreed at theThis article was written byThe Sunday Investor7.15K FollowersFollowThe Sunday Investor is focused exclusively on U.S. Equity ETFs. He has a strong analytical background, has received a Certificate of Advanced Investment Advice from the Canadian Securities Institute, and has completed all the educational requirements for the Chartered Investment Manager designation.Having covered hundreds of ETFs on Seeking Alpha, The Sunday Investor has developed a complex, proprietary ETF Rankings system which he shares on his website, etf-rankings.com. Nearly 1,000 ETFs receive individual factor scores covering costs, liquidity, risk, size, value, dividends, growth, quality, momentum, and sentiment, which feed into an easy-to-understand composite score from 1-10.

The Sunday Investor is always active in the comments section in his articles - please don't hesitate to reach out via comment in any article or by visiting etf-rankings.com. Happy Investing!Analyst’s Disclosure: I/we have a beneficial long position in the shares of SCHD, FDVV, SPY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.