If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the State Street SPDR S&P Dividend ETF (SDY), a passively managed exchange traded fund launched on November 8, 2005.
The fund is sponsored by State Street Investment Management. It has amassed assets over $20.21 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.58%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector -- about 19.6% of the portfolio. Consumer Staples and Utilities round out the top three.
Looking at individual holdings, Verizon Communications Inc (VZ) accounts for about 2.51% of total assets, followed by Realty Income Corp (O) and Chevron Corp (CVX).
The top 10 holdings account for about 18.84% of total assets under management.
Performance and Risk
SDY seeks to match the performance of the S&P High Yield Dividend Aristocrats Index before fees and expenses. The S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years.
The ETF has gained about 9.01% so far this year and was up about 4.3% in the last one year (as of 12/12/2025). In the past 52-week period, it has traded between $121.58 and $142.97.
The ETF has a beta of 0.76 and standard deviation of 12.78% for the trailing three-year period, making it a medium risk choice in the space. With about 152 holdings, it effectively diversifies company-specific risk.
Alternatives
State Street SPDR S&P Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SDY is a sufficient option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $71.54 billion in assets, Vanguard Value ETF has $157.75 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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State Street SPDR S&P Dividend ETF (SDY): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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