Fidelity High Dividend ETF sidesteps the common perils of investing in high-yield stocks, making it an attractive strategy that should deliver strong yield and stack up well against the Russell 1000 Value Index long-term. This low-cost fund merits a Morningstar Medalist Rating of Silver.
This index strategy takes a well-rounded approach to stock selection. Yield, measured relative to stocks’ sector peers, mainly drives the process. This can invite risk because the highest-yielding stocks are often some of the weakest. The fund combats that by incorporating payout ratio and dividend growth – signals of financial health—into stock selection. It also screens out firms with the worst payout ratios, as their dividends can belie their shaky outlooks. Some sinking stocks will slip through the cracks, but these measures reject many of the market’s riskiest firms and breed a high-quality portfolio.
Measuring yield on a sector-relative basis makes sense. It facilitates cleaner comparisons between stocks and emphasizes sectors often underrepresented in dividend funds, like technology. Normally this would dampen yield, but this fund reallocates portfolio weight from lower-yielding sectors (like technology) to higher-yielding ones (like real estate) at each rebalance. This drums up more income and highlights sectors that look cheap relative to their dividends.
A unique weighting system confers many of market-cap weighting’s benefits and keeps concentration in check. The fund weights stocks in proportion to their market capitalization, then layers on an equal weight boost to each stock. This feature promotes diversification and can minimize the impact of riskier high-yield holdings. Unlike many of its U.S.-focused peers, this fund may allocate up to 10% of its portfolio to international stocks, adding to its diversification and yield profiles.
This fund has struck a delicate balance between delivering strong yield and limiting risk. Since its inception in September 2016, the fund’s yield has consistently ranked in the large-value category's highest decile, while its volatility mirrored the Russell 1000 Value Index, its category benchmark. Risky stocks still populate the portfolio–and this fund has seen brief stretches of underperformance–but its success across market environments is a testament to this unconventional approach’s efficacy.

Analyst Rating

Unique but sound.

Analyst

Ryan Jackson

Apple

Microsoft

NVIDIA

Exxon Mobil

JPMorgan Chase & Co

Procter & Gamble

PepsiCo

Chevron

Coca-Cola

Caterpillar

This fund generates attractive yield while avoiding most stocks that are cheap for valid reasons. It also taps into the market's collective expertise and diversifies away most sources of risk, meriting an Above Average Process Pillar rating.

Above Average

Process

A five-manager team at Geode Capital runs this strategy. Geode’s deep bench of experienced portfolio managers and expanding cast of supporting personnel and technology warrant an Above Average People Pillar rating. 
The depth of Geode’s investment personnel instill confidence that they will provide high-fidelity index tracking. Chief Investment Officer Diane Hsiung sits atop index portfolio management operations. Years of experience managing iShares ETFs ensured a smooth transition after her 2021 arrival. She oversees the named managers on this strategy: Louis Bottari, Peter Matthew, Robert Regan, Payal Gupta, and Navid Sohrabi. It’s an experienced group that draws support from two assistant portfolio managers, both of whom were recently promoted from the operations team. A pair of index analysts help the team prepare for index rebalances and corporate actions. 
Geode takes a team approach to portfolio management, creating layers of backup for each strategy to minimize the effects of any personnel turnover. Managers primarily review and approve trades before handing them to a dedicated trading desk. Tracking performance comes first, but they can use discretion when value-add opportunities present themselves around rebalances. Most of the managers’ workflow is automated, though, and Geode has invested to ensure their technology resources are up to speed. 
An independent risk oversight team regularly reviews portfolio performance. Managers’ compensation is tied to index tracking, aligning their interests with investors’.

People

Fidelity earns an Above Average Parent rating because of its ability to stay ahead of its competition.

The firm's successful stock-picking mutual funds fueled its rise to prominence, and it has adapted well to investor preferences that have shifted markedly over the past two decades. Index funds and exchange-traded funds have garnered most of the industry's flows as money has gushed from actively managed products—Fidelity's included. Yet overall, the asset-management division has continued to achieve positive organic growth by introducing or maintaining aggressive pricing on its own suite of passively managed funds and expanding its menu of client-demanded investment structures, such as managed accounts and collective investment trusts. These moves are made possible by the firm's strong distribution network, scale, established brand, and willingness to tolerate losses on some products in pursuit of broader strategic objectives.

The firm is not without blemishes. It could stand to rationalize its lineup of active equity funds and do better to maintain continuity in an equity fund's portfolio construction as the fund's leadership inevitably changes.

Overall, the firm has served its funds' investors well. It boasts a topnotch fixed-income division and remains home to some of the industry's most talented equity managers and a strong team supporting its well-run target-date series.

Parent

Fidelity High Dividend ETF

FDVV tracks an index of large- and mid-cap companies that exhibit positive dividend characteristics, with overweights to sectors that exhibit higher dividend yield.

Vanguard High Dividend Yield ETF

Looking to potentially add some current income to your portfolio? With the U.S. economy facing growing headwinds, current income via dividends specifically can provide meaningful ballast to an overall investment portfolio.

Find Opportunities for Your Portfolio With High Dividend ETF FDVV

Designed to provide broad exposure to the Style Box - All Cap Value category of the market, the Fidelity High Dividend ETF (FDVV) is a smart beta exchange traded fund launched on 09/12/2016.

Is Fidelity High Dividend ETF (FDVV) a Strong ETF Right Now?

Dividend-paying stocks perform well in high inflation environments, with the Fidelity High Dividend ETF outperforming other high div ETFs. FDVV focuses on dividend yield and excludes stocks with high payout ratios, prioritizing companies with potential for dividend growth. FDVV's sector allocation strategy results in a higher beta and contributes to its outperformance compared to other high div ETFs.

FDVV: A Best Performing High Div ETF Thanks To Its Higher Beta And Sector Selection

Fidelity High Dividend ETF is a solid investment for volatile market conditions due to its well-diversified portfolio and ability to perform well in both bull and bear markets. FDVV offers an above-average dividend yield of around 3.8% and has a strong track record of dividend increases, making it an attractive long-term investment. The ETF's exposure to large-cap growth and value stocks, as well as its high dividend grade and low-risk rating, contribute to its potential for sustainable returns.

FDVV: A Perfect ETF For Both Bull And Bear Markets

FDVV selects approximately 100 securities based on a proprietary dividend yield, dividend growth, and dividend payout ratio screen. Fees are 0.29%, and the ETF manages $1.5 billion in assets. February's reconstitution improved the fund's quality but decreased its yield. Instead of FDVV's 3.81% trailing dividend yield, shareholders can expect 3.25% going forward. The lower yield may be disappointing but I view it positively from a total returns perspective. Utilities stocks were removed entirely, and the ETF is a top performer in 2023.

FDVV: Shrinking 3.25% Dividend Yield, But An Optimistic Outlook

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Investing in dividend-paying stocks has proved to be a helpful strategy, outperforming global markets over the long term. Dividend income strategies play an important role for multi-asset income portfolios. But they can also run the risk of being too narrowly focused, which can limit both income potential and upside participation when equity markets rise.

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Stocks paying higher dividends showed their mettle during a challenging 2022: the S&P 500 High Dividend Index declined only a modest –1.1% even as the S&P 500 tumbled –18.1%. In our view, much of the volatility in high-dividend strategies, broadly speaking, comes down to portfolio design choices, which can create very different characteristics.

Taming Biases In High-Dividend Equity Strategies

FDVV is a dividend fund by Fidelity, well-diversified across sectors and holdings. Valuation ratios look attractive, and quality is a bit superior to the benchmark.

FDVV: A Well-Diversified Dividend ETF

Inflation and recession fears are making investors seek safe havens such as high-quality dividend-paying stocks. Fidelity High Dividend ETF gives exposure to numerous high-quality dividend-paying stocks.

FDVV: Invest In Dividend Safety In A High-Interest Rate Environment

FDVV is a high-dividend ETF with a 3.44% trailing dividend yield. Its expense ratio is 0.29% and has $1.34 billion in assets under management. Fidelity's model is proprietary, but it appears to take a barbell approach by combining low-risk defensive stocks with high-growth mega caps.

FDVV: A Barbell Dividend ETF Yielding 3.44% Worth Waiting For

The Fidelity "High Dividend" ETF has a TTM distribution yield of 3.96%. I wouldn't exactly call that "high yield" considering the current two-year Treasury is yielding ~4.5%. However, that is not necessarily a reason not to like the FDVV fund, which has out-performed the S&P 500 by almost 7% this year.

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In turbulent times, investors would be well served considering the best Fidelity funds to buy now. Primarily, Fidelity represents an organization with a well-earned reputation for viability and stability.

10 Best Fidelity Funds to Buy Now

The Fidelity High Dividend ETF is certainly differentiated from most other high-dividend ETFs I have recently evaluated. I say that because the FDVV dividend ETF appears to be more thematic in nature: it is significantly overweight the energy and REIT sectors, yet the #1 holding is Apple.

Fidelity High Dividend ETF: Overweight Energy And REITs

The Fidelity High Dividend ETF selects about 100 large-cap stocks screened for three factors: dividend yield, payout ratio, and dividend growth. Fees are 0.29%, and FDVV's trailing yield is 2.91%. I expect the yield to increase to 3.28% after February's Index reconstitution. This article will detail those changes, highlighted by a substantial increase to defensive Utilities stocks.

FDVV: 3.28% Expected Dividend Yield, Practical Index Changes, And Still A Buy

Dividend investing has been in vogue amid bouts of volatility and uncertainty, pushing dividend ETFs to new highs.

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FDVV is a dividend ETF with 40% of asset value in two sectors: technology and financials.

FDVV: Good Value, Average Quality And Performance

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Each month, I give a broad overview of dividend and income-focused ETFs, selecting them from my growing database of about 750 funds. I've added a seventh category to this monthly series: risk management ETFs, bringing the total number of funds analyzed to 88.

December Dividend And Income ETF Report: The Ultimate Investors Guide

FDVV may be too complex, but it's difficult to overlook how attractive the ETF is at the moment. High-yield investors will be satisfied with its 3% payout, while dividend growth investors like how FDVV's constituents have grown dividends by 10% per year in the last five years.

FDVV Is A Buy, Now Let Me Tell You Why

FDVV is a high-yielding ETF with a poor track record and a very complex process for selecting stocks. An analysis of its current constituents reveals it is likely to align itself with the Russell 1000 if the bull market persists, but is very exposed if a correction occurs.

FDVV: An Attractive 3% Yield, But Just Too Complex For My Liking

FDVV is a passively managed fund that tracks the Fidelity High Dividend Index. The benchmark is rebalanced only once a year, likely to minimize the portfolio turnover.

FDVV: High-Yield Fund With Peculiar Stock Hierarchy

FDVV strategy and performance. Comparing FDVV with simple strategies.

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Fidelity has a growing ETF footprint and some of the following cost-efficient products can get investors into the firm's ETF stable.

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News for Fidelity High Dividend ETF ETF (FDVV)