Is iShares Select Dividend ETF (DVY) a Strong ETF Right Now?

Launched on 11/03/2003, the iShares Select Dividend ETF (DVY) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Blackrock. It has amassed assets over $21.07 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the Dow Jones U.S. Select Dividend Index.

The Dow Jones U.S. Select Dividend Index measures the performance of a selected group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time.

Cost & Other Expenses

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Annual operating expenses for DVY are 0.38%, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 3.62%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

DVY's heaviest allocation is in the Financials sector, which is about 28.4% of the portfolio. Its Utilities and Consumer Staples round out the top three.

Looking at individual holdings, Ford Motor Co (F) accounts for about 2.65% of total assets, followed by Seagate Technology Holdings Plc (STX) and Altria Group Inc (MO).

The top 10 holdings account for about 19.71% of total assets under management.

Performance and Risk

So far this year, DVY return is roughly 12.31%, and is up roughly 11.74% in the last one year (as of 12/30/2025). During this past 52-week period, the fund has traded between $118.37 and $144.54.

DVY has a beta of 0.74 and standard deviation of 14.29% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 106 holdings, it effectively diversifies company-specific risk .

Alternatives

iShares Select Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $71.93 billion in assets, Vanguard Value ETF has $157.34 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value

Bottom Line

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This article originally published on Zacks Investment Research (zacks.com).

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