SPDR S&P Dividend ETF: Nearing A Good Entry Point

David Dierking

The S&P 500 has come roaring back following the March bear market low, gaining more than 50%, but one group that has been left behind has been dividend payers.

Dividend growth stocks have done better as investors have sought out safety and predictability. High yielders, on the other hand, have been the big laggards. As dozens of companies have trimmed or outright suspended their dividends, investors have moved away from dividend yields that come with a high perceived degree of risk.

One fund that came up recently via a reader question was the SPDR S&P Dividend ETF (SDY), a fund that utilizes a hybrid dividend growth/high yield strategy.

Dividend stocks have come somewhat back into favor as investors have begun pivoting away from strictly tech and growth stocks and testing out cyclicals and other areas of the market.

SDY looked like it was possibly breaking out earlier this month following a long, slow recovery from the March bottom.

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source: TradingView.com

I labeled the point in question on the chart, but wanted to see if it was able to follow through on its spike through the trendline. When I originally made this video earlier in the week, it was right at its near-term high around $99. I noted that if it could break through $100 and even top its June high around $101, it could help confirm the uptrend and suggest SDY was at a point you'd want to buy.

Since then, SDY has headed back in the other direction, which was something I feared might happen.

It's back down to around $98, not enough to suggest the uptrend might be over, but enough to indicate that short-term momentum may have faded for the moment.

I'd keep looking at the $101 level as a good buying point. If it can break through its June peak and begin to approach its highest price since the early stages of the bear market, it could confirm that investors are interested in accumulating high yield equities again.

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