The SPDR S&P Dividend ETF (SDY +0.73%) is a dividend-focused exchange-traded fund (ETF) that takes a hybrid approach, targeting both dividend growth and high-yield stocks rather than choosing between the two. This strategy offers the best of both worlds.
Exchange-Traded Fund (ETF)
However, it also adds a layer of complexity that beginner ETF investors should understand before committing their money. Here's what you need to know about how SDY ETF works, what it holds, and whether it's the right fit for your portfolio.
NYSEMKT: SDY
Key Data Points
What is the SPDR S&P Dividend ETF?
The SPDR S&P Dividend ETF is a passive ETF that tracks the S&P High Yield Dividend Aristocrats Index, offering exposure to companies with long histories of dividend growth and relatively high yields.
The index starts with the S&P Composite 1500, which includes large-cap, mid-cap, and small-cap stocks as its selection universe. From there, it eliminates any company that hasn't increased its dividends for at least 20 consecutive years.
Once the final list of dividend-growing companies is determined, the SPDR S&P Dividend ETF weights them by dividend yield, meaning higher-yielding stocks receive more weight in the fund. This contrasts with most ETFs, which typically weight holdings by market capitalization instead.
Does SPDR S&P Dividend ETF pay a dividend?
Yes, SPDR S&P Dividend ETF pays a dividend. As of mid-October 2025, it had a 2.56% 30-day Securities and Exchange Commission (SEC) yield with quarterly distributions. Not all its payouts are taxed as qualified dividends since this ETF holds some real estate investment trusts (REITs) that distribute ordinary income, which is taxed at higher rates.
What Is SPDR S&P Dividend ETF's expense ratio?
The SPDR S&P Dividend ETF has an expense ratio of 0.35%, meaning investors pay $35 annually for every $10,000 invested. The fee isn't paid directly but is deducted from the ETF's performance on the back end, reducing overall returns.
Expense Ratio
Compared to other dividend ETFs from Vanguard, BlackRock (BLK +3.97%), and Schwab (SCHW +2.08%), the SPDR S&P Dividend ETF's expense ratio is on the higher side. Lower-cost alternatives may provide similar dividend exposure at a fraction of the cost.
Historical performance of SPDR S&P Dividend ETF
Here's a look at the SPDR S&P Dividend ETF's historical annualized total returns (i.e., with dividends reinvested) over various trailing periods.
Metric | 1-Year | 3-Year | 5-Year | 10-Year |
|---|---|---|---|---|
Net asset value | (0.95%) | 9.70% | 10.25% | 9.79% |
Market price | (1.00%) | 9.67% | 10.24% | 9.79% |
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The bottom line
The SPDR S&P Dividend ETF is an above-average generalist dividend ETF that attempts to blend two very different strategies -- dividend growth and high yield -- into a single fund. This hybrid approach makes it a decent option for investors looking for broad dividend exposure in one package. However, those who prefer a more targeted approach may find it lacking, especially given its 0.35% expense ratio.
SPDR S&P Dividend ETF's 2.56% yield may not be high enough for income-focused investors, and the lack of monthly payouts could be a drawback. Meanwhile, dividend growth investors may prefer ETFs that select from the more stringent S&P 500 instead of the S&P 1500 and require at least 25 years of consecutive dividend growth rather than 20.
