In spite of the performance of financials within its holdings, DVY continues to bring home the bacon, with a June dividend distribution of 0.631/shares -- a 12% increase over last June's dividend payment. 

Dividend investors look at the income stream, recognizing that the NAV will bounce around, like all equity-based investments.

Year-over-year, DVY's dividend has DECREASED each of the last 2 years.   It is easy to hide this (for a while) when you cut dividend payments and/or increase the time between payments as DVY has done over the past 3 years.  But eventually the truth comes out.

 That truth is that the dividend payment in 2007 was over 30% LOWER than the payment in 2006.  And the 2006 payment was over 8% LOWER than in 2005.  Those are ugly numbers for anyone that was depending on those dividends...

You might want to check your analysis -- the stream of numbers is correct, but you might notice that there was NO dividend payment last June.   There were only 2 dividend payments in 2007 -- March and September.  If they wanted to keep things kosher (for year-to-year comparison), they would have made another March payment.  But they waited until June.

Why did they wait?  I believe it was so that they could make it look like the dividend increased.  But 63.1 cents/share over a 9-month period is well below the 59.7 cents/share over the 6 month period ending Sep-07.  And it is WAY below the 56.5 cents/share for the 3-month period ending June-06. 

http://www.ishares.com/product_info/fund/distributions/DVY.htm

http://www.etfconnect.com/select/fundpages/etf_funds.asp?MFID=120729

These links may shed some light on the issue.

Have fun.

John Walter Russell

AcmeFool has some good points.

Is this only a problem with Yahoo Finance or is it something else? I would like to know.

Have fun.

John Walter Russell

I think that NAV and price are important to the yield oriented investor.  If the price drops a lot, the yield goes up a lot... and eventually, the entity will cut its dividend to the yield that it views as necessary to pay to attract investors and that will be less detrimental to its NAV.

I think that a security that can't maintain its NAV and price fairly steady over the long term is really giving you back part of your principal to maintain its current dividend.  You are sacrificing capability to earn future dividends to maintain present dividends.

If a yield oriented security like DVY has been losing value as the Fed drops rates, you have to wonder what will happen when rates rise.  I think that you have to throw in the risk of the market's response to the end of Bush's tax cuts, which would take out the 15% tax on equity dividends.  The odds favor that they will expire as a democratic Congress is very likely to prevent the action necessary to continue them... and maybe the market has been anticipating that.  Seems like a pretty risky way to get a 5% yield to me.  I don't think that a little over 5% is rewarding you for the risk you are taking...

jmho

erryl

AcmeFool:

You might want to check your analysis -- the stream of numbers is correct, but you might notice that there was NO dividend payment last June.   There were only 2 dividend payments in 2007 -- March and September.  If they wanted to keep things kosher (for year-to-year comparison), they would have made another March payment.  But they waited until June.

Why did they wait?  I believe it was so that they could make it look like the dividend increased.  But 63.1 cents/share over a 9-month period is well below the 59.7 cents/share over the 6 month period ending Sep-07.  And it is WAY below the 56.5 cents/share for the 3-month period ending June-06. 

This means what you referred to as a 12% increase year-over-year was really closer to a 63% DECREASE over 2 years.

Here's the payout history from the iShares web site: http://tinyurl.com/5329ja

iShares shows a July 5, 2007 payment of 0.58298/share.
I checked my brokerage account and found that I received dividend payments from DVY in  March, early July, early Oct 2007, and again on 1.3.08.

 Greg

Am I the only investor who has received a dividend payment from DVY each and every quarter since its inception? Mr. Fool's comments certainly do not jibe with my experience.

Bobbi 

Greg:

The problem is you left out a few quarters in you initial chart and the poster must have thought you were providing the entire history for that period.

Your no Justin :o}

closer:

For the record, DVY's NAV has lost -20.67% through July 1, according to data posted on Morningstar and Yahoo! Finance. (Compare that to the cef BGR which has gained +21.45% in the same time frame.) DVY's NAV isn't "bouncing around." Look at its chart on ETF Connect: Since Oct. 2007 it has been on a downward trajectory, losing -26.07%.

DVY has certainly sustained an NAV loss.  I have compared it to others on this chart: http://tinyurl.com/6f4nzx

 Greg

bilperk:

Greg:

The problem is you left out a few quarters in you initial chart and the poster must have thought you were providing the entire history for that period.

Your no Justin :o}

Bill, you're right on all counts!

Greg

DVYs dividend amount has grown 7.5% per year.

That's not too shabby.

Its price, of course, has fallen, which makes it more attractive to first time buyers.

Have fun.

John Walter Russell

JWR1945a:

DVYs dividend amount has grown 7.5% per year.

That's not too shabby.

Its price, of course, has fallen, which makes it more attractive to first time buyers.

Have fun.

John Walter Russell

This fund is a perfect example of what folks mean when they say index funds underperform in a correction or a bear.

DVY is an index fund.  The stocks it hold have to be the 100 highest yielding in the stock market, excluding REITS, that meet certain criteria (dividend growth over the last five years, 200,000 shares per day traded, AND, less than 60% payout ratio.

Those criteria exclude virtually everything ElLobo holds.  The payout ratio and the shares traded per day give the fund a huge "value" bias and that means financials.  In fact, 50% financials. 

Instead of dumping financials last year like an active fund might have, DVY actually hold on tighter to their financials, because as the price drops, the yield rises, making it less likely they will be kicked out of the index as long as they keep their dividend rising or level, and stay below the 60%.

While the price may be more attractive now, many believe that financials are in for a lot more pain.

Of course with a 5+% current yield, this fund is getting more attractive for an income investor who is not concerned with capital preservation as their primary goal.

best,

Bill

Long term vs short term??

Total return

DVY - 48%; growth of 10k - $14,792

    peak - 62%; $16, 180

VTI - 24%; $ 12,356

    peak - 48%; $14,801

NB - time frames are off slightly b/c of different dates of formation.  VTI was $10,029 on date DVY started trading.

Roberta
 

closer:

DVY lost -2.03% today, worse than the DJIA which gave up -1.46%.

And what does the DJIA yield?  Comparing to a hot sector closed end fund is worthless.  If you were to buy that fund now, you might well be having this same conversation about it in a year or two.

If we are comparing apples to apples, then a better benchmark for DVY would be 50% XLF, 40% VMVIX, and 10% VISVX.  This blend is reasonably close to the index equivalent of DVY irrespective of yield, based on style box locations.

The above blend has a one year loss of 32.7% and a YTD loss of 20.57%, while DVY is -30.41% for one year and -22.59.YTD.  The 3 year returns are also similar at around  minus 4.5%.

DVY has a current yield of 4.5% and the above blended yield is 2.88%.  And DVY's yield is growing at 7%

I agree with JWR because one of two things will happen; the stocks on  the 50% financial side will continue to grow and not cut their dividend, or they will be kicked out of the DVY club and replaced with a stock from some other sector.

This fund should always have a good yield in the 3.5-6% range and good growth of dividend, due to its criteria for remaining in the fund.  The NAV will bounce around.

The down side is, when this fund kicks out a financial stock, it will surely do so at a loss and that loss is then locked in.  If this happens for a significant portion of the financial sector of this fund, then the forced selling of stocks when they are down (perhaps just when they might be about to begin to recover) may keep the NAV subdued even in a recovery.

If I was thinking of  buying this fund, I think I'd wait awhile.

best,

Bill