First Trust Value Line Dividend ETF FVD effectively targets only the safest dividend-payers in the U.S. market. For investors willing to stomach its 0.65% fee, this index fund should deliver on its promise of a solid yield and relatively stable return stream. 

The fund tracks the Value Line Dividend Index, which uses a range of screens to arrive at its final holdings. First, it sorts a broad universe of stocks listed in the United States by their standard deviation of returns over the past five years. It then assembles a composite score for each stock by combining multiple measures of financial strength such as profitability, sales growth and consistency, and debt, among others. Only financially strong and stable companies with expected dividend yields above the S&P 500 are included in the portfolio.

High dividend yields can be associated with deteriorating fundamentals, and this approach cuts out many of those relative weaklings. This means the fund does not achieve a yield on par with other, riskier, dividend-focused peers. This is a worthy trade-off that should help control risk. The fund’s 2.2% average 12-month yield over the past five years matches that of the Russell 1000 Value Index, its Morningstar Category benchmark. 

Each stock in the portfolio receives the same equal weighting at every monthly rebalance. This approach amplifies sector biases but effectively spreads risk across the portfolio. The fund heavily favors utilities stocks at the expense of healthcare and energy names. These differences will not always be rewarded by the market but should help contain volatility as utilities stocks tend to be more stable than most. Despite these differences, the portfolio remains well diversified with its top 10 holdings regularly accounting for just 6%-7% of fund assets, considerably less than peers that weight their holdings another way.

In keeping with its measured approach, the fund effectively minimizes volatility. Throughout periods of outperformance and underperformance, the fund’s volatility has consistently measured around 15%-20% less than the Russell 1000 Value Index. Portfolio differences mean that performance may not always measure up to the benchmark, but the fund’s consistently lower volatility and steady yield should continue through most market cycles.

Analyst Rating

A pricy yet appealing dividend ETF.

Analyst

Zachary Evens

Watsco

Texas Instruments

Analog Devices

Tractor Supply

Keurig Dr Pepper Inc

Rollins

California Water Service Group

Kimberly-Clark

Union Pacific

Avery Dennison

FVD aims to deliver a competitive yield while maintaining below-average risk. This is a delicate balance the fund consistently strikes, earning it an Above Average Process Pillar rating.

Above Average

Process

First Trust's management team possesses the resources and support necessary to closely track its target index. The team’s index-tracking ability does not stand out against large and deeply resourced competitors, though. It earns an Average People Pillar rating.

Seven members of the firm's portfolio management and trading group share responsibility for this ETF, and manager turnover has been low. Five managers have been with the fund since 2006 or before. Roger Testin, Jon Erickson, and David McGarel have been responsible for the fund since its August 2003 launch. Chris Peterson and Erik Russo are the most recent additions, joining the roster in 2016, and 2020, respectively. While relatively new joiners, they offer more than 30 years of combined experience at the company.

First Trust takes a team approach to managing the fund, and it relies on a combination of in-house and third-party tools that automate and streamline many day-to-day tasks. The managers try to minimize tracking error in the most tax-efficient way possible and have dedicated technology staff to ensure the operation runs smoothly. The firm's investment committee conducts regular performance checks, and tracking performance is formally reviewed each quarter. Portfolio managers typically handle many corporate actions themselves, but the investment committee will play a role in larger changes that occur outside of a fund's normal rebalancing schedule.

Average

People

First Trust meets the industry standard for stewardship, but it could do more to align itself with investors. It earns an Average Parent rating.

This is a team-oriented organization that eschews star managers. While exchange-traded funds represent the bulk of the firm's assets, First Trust bypasses the competitive market for low-cost beta funds, instead opting for complex strategies with higher management fees. However, the firm's focus on ETFs for future product development underpins its commitment to tax efficiency and transparency. Some of its thematic strategies appear trendy, but it stands behind them and rarely liquidates funds. 

The firm is a private partnership, controlled by Jim Bowen, the CEO. Many senior managers are limited partners. This ownership structure helps the firm stay focused on the long term and promotes retention, which has been strong for the investment team. The firm has grown considerably over the past decade and is among the largest providers of actively managed ETFs, as well as unit investment trusts. As it has grown, the firm has expanded its investment team and beefed up its technology infrastructure.

First Trust's focus is on educating advisors and providing them solutions. This may benefit investors indirectly, but First Trust could do more to directly align with investors by cutting fees and limiting trendy strategies.

Parent

First Trust Value Line Dividend Index Fund

FVD tracks an equal-weighted index of dividend-paying companies. The index excludes companies with less than $1 billion in market cap, risky ranking and lower-than-average dividend yield.

FVD is a smart-beta dividend ETF that favors low volatility and financial resilience. Since my January analysis, FVD has made rather notable changes to the portfolio, as it removed 14 and added 27 companies. However, the factor mix has not changed much, with the bulk of the net assets still allocated to less-volatile, slowly growing defensive names.

FVD: A Low-Volatility Play That Might Surprise In A Correction

The First Trust Value Line Dividend ETF (FVD) made its debut on 08/19/2003, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.

Is First Trust Value Line Dividend ETF (FVD) a Strong ETF Right Now?

Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the First Trust Value Line Dividend ETF (FVD) is a passively managed exchange traded fund launched on 08/19/2003.

Should First Trust Value Line Dividend ETF (FVD) Be on Your Investing Radar?

FVD is designed for dividend investors who are not ready for compromises when it comes to the resilience of financial position and volatility. It does offer a defensive tilt, as illustrated by the weighted-average beta coefficients and its performance in 2008 and 2022. Yet it still significantly under-delivered over the last ten years, as it was unable to keep pace either with the S&P 500 or with a few dividend-oriented peers I cover.

FVD: A Low-Beta Dividend Fund Under-Delivers

iShares Core Dividend Growth ETF

WisdomTree US Quality Dividend Growth Fund

Siren DIVCON Leaders Dividend ETF

FlexShares Quality Dividend Defensive Index Fund

FlexShares Quality Dividend Index Fund

First Trust Rising Dividend Achievers ETF

Schwab US Dividend Equity ETF

SPDR S&P 500 ETF Trust

Vanguard Dividend Appreciation ETF

Dividend growth investing is a great strategy for long-term investors, offering compounding from reinvestment, dividend growth, and stock price appreciation. The best dividend growth stocks and ETFs tend to have a quality tilt, picking companies with sustainable competitive advantages and growth capabilities. I highlight three dividend growth ETFs with a history of beating the market in total returns and discuss what makes them each unique in their own ways.

3 Quality Dividend Growth ETFs For Maximal Total Returns

Amplify CWP Dividend & Option Income ETF

iShares Select Dividend ETF

Schwab Fundamental U.S. Large Company Index ETF

CBOE Vest S&P 500 Dividend Aristocrats Target Income ETF

ProShares S&P 500 Dividend Aristocrats ETF

Global X NASDAQ 100 Covered Call ETF

Global X Russell 2000 Covered Call ETF

SPDR S&P Dividend ETF

Vanguard High Dividend Yield ETF

Global X S&P 500 Covered Call ETF

KNG employs a buy/write strategy quite successfully, considering the small opportunity cost in relation to market total returns and the decent dividend yield over the years.

KNG: Not The Buy/Write ETF King

We're in a period of increased market volatility. Many think we're heading into a recession, if not this year, then probably early next year.

NYSE's ETF Leaders: First Trust Advisors' Ryan Issakainen

First Trust Value Line® Dividend Index Fund ETF holds over 150 stocks in equal-weight. First Trust Value Line® Dividend Index Fund ETF is well-balanced across sectors. Utilities, industrials, and consumer staples are the heaviest ones.

FVD: Dividend Quality ETF Mitigating Downside Risks

iShares Core High Dividend ETF

The dividend-focused products offer safety through payouts and stability in the form of mature companies that are less volatile amid large swings in stock prices.

A Guide to the 10 Most-Popular Dividend ETFs

WisdomTree Emerging Markets High Dividend Fund

WisdomTree Global High Dividend Fund

WisdomTree U.S. High Dividend Fund

Sound Equity Income ETF

WisdomTree U.S. Total Dividend Fund

WisdomTree International High Dividend Fund

VanEck Morningstar High Dividend ETF

AAM S&P Emerging Markets High Dividend Value ETF 

First Trust Morningstar Dividend Leaders Index Fund

Fidelity Dividend ETF for Rising Rates

Fidelity High Dividend ETF

Xtrackers MSCI All World ex US High Dividend Yield Equity ETF

Xt EAFE Div Yld Shs

Voya Asia Pacific High Dividend Equity Income Fund

Voya Emerging Markets High Income Dividend Equity Fund

Invesco KBW High Dividend Yield Financial ETF

Legg Mason Low Volatility High Dividend ETF

Legg Mason International Low Volatility High Dividend ETF

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.

Dividend Investing: Broader Is Better For Multi-Asset Strategies

FVD invests in a basket of stocks run through a long-tenured Safety Ranking system developed by Value Line. The ETF is large, and liquid enough to merit consideration from many investors.

First Trust Value Line Dividend ETF: Some Attractive Features, But A Sell For Now

FVD is a dividend ETF with a safety filter and an equal-weight methodology. It is better-balanced in sectors and holdings than the S&P 500.

FVD: Equal-Weight Dividend ETF With Safety Screening

FVD holds nearly 200 U.S.-listed low-volatility, dividend-paying stocks. Assets under management exceed $12 billion, but the fund's expense ratio is high at 0.67%. FVD yields 2.14%, and I'm forecasting only a slight improvement to 2.50%. Still, its sales, earnings, and dividend growth are well below average among its peers.

FVD: How This $12B Dividend ETF Takes 10% Of Your Gains

The top 10 dividend ETFs have had inflows of more than $32 billion this year.

Dividend ETFs Still Popular Despite Bond Yield Surge

FVD implements an equal-weight, dividend-oriented strategy. Utilities, Industrials and Financials are its heaviest sectors.

FVD: Finally Outperforming In 2022

FVD invests in U.S. and international stocks that sport safety characteristics together with above-average yields. The article delves into portfolio changes since September 2021 with an attempt to find a rationale behind investment decisions made.

FVD: Assessing Portfolio Changes Since September 2021

FVD strategy: picking dividends with a safety filter. Sector composition and performance vs. benchmark.

FVD: Dividend Stocks Selected For Safety

FVD's investment mandate is to track the Value Line® Dividend Index. FVD is an international equity mix tilted towards U.S. heavyweight dividend payers. Despite monthly rebalancing and reconstitutions, the fund remains permanently overweight in both large- and mid-cap utilities.

FVD: Expensive, Utilities-Heavy Fund

FVD follows an Index with a safety focus, comprised of 191 equities across multiple regions that have above-average price stability and financial health rankings.

Insure Your Portfolio With The First Trust Value Line Dividend ETF

The dividend-focused products offer safety through payouts, and stability in the form of mature companies that are less volatile amid large swings in stock prices.

A Guide to 10 Most-Popular Dividend ETFs

WisdomTree U.S. LargeCap Dividend Fund

Invesco S&P Ultra Dividend Revenue ETF

ALPS Sector Dividend Dogs ETF

Invesco S&P 500 High Dividend Low Volatility ETF

SPDR Portfolio S&P 500 High Dividend ETF

It has been one year since my article covering 18 dividend-focused ETFs was published and I will be reviewing the performance of the group. The performance data showed only 1 of the 18 dividend-focused ETFs outperformed the S&P 500 since last year.

The Best ETFs For Dividend Investors: 1-Year Review

Distillate U.S. Fundamental Stability & Value ETF

First Trust Dow 30 Equal Weight ETF

Distillate Capital rolls out a second fund, while other funds undergo reorganizations and index changes.

New International ETF Considers Free Cash Flow

FVD strategy and performance. Comparing FVD with simpler strategies.

Dividend ETF Review: FVD

VictoryShares US EQ Income Enhanced Volatility Wtd ETF

Dividend ETFs: Anomalies Are Great, So Long As They Aren't Mirages

iShares International Select Dividend ETF

The dividend-focused products offer safety through payouts, and stability in the form of mature companies that are less volatile to large swings in stock prices.

News for First Trust Value Line Dividend Index Fund ETF (FVD)